NYK Line plans $1.95 billion bond issue to finance green fuel switch
Japanese shipping major Nippon Yusen Kaisha (NYK Line) plans to issue green bonds totalling 100 billion yen ($653 million) to finance the construction of ammonia-fuelled vessels.
PHOTO: Concept image of ammonia-fuelled ammonia gas carrier. NYK Line
It also plans to issue transition bonds worth 200 billion yen ($1.3 billion) to finance the construction of LNG-fuelled vessels.
Green bonds are financial products specifically earmarked to raise capital for financing green projects that are related to renewable energy, energy efficiency and zero-emission transportation. Green bond proceeds must be used only for “green projects.”
Transition bonds are financial instruments designed to raise funds for projects aimed at transitioning towards greener practices. Unlike green bonds, which specifically fund projects with direct environmental benefits towards reducing global warming, transition bonds finance activities that facilitate the transition from high-carbon to low-carbon practices.
The new bond issues are part of NYK Line's total allocation earmarked for developing alternative-fuelled vessels by 2030. The company has allocated a total investment of 430 billion yen ($2.8 billion) towards construction of 31 LNG-fuelled vessels, three ammonia-fuelled ships, eight LPG-fuelled vessels and four methanol-fuelled ships by 2030. This includes a fuel conversion premium of 80 billion yen ($522 million), it said in a green transition report.
It wants to finance the initial investments, research and subsequent operations of its proposed LNG and ammonia-fuelled vessels using proceeds from the current bond issue of $1.95 billion.
NYK Line’s first ammonia-fuelled vessel, a tugboat, is scheduled to commence operations this year. It plans to commercially launch ammonia-fuelled ammonia carrier by 2026.
By Konica Bhatt
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