Honda Motor Co. raises $2.75 billion in bonds to benefit the environment for the first time, joining rival Ford Motor Co. in tapping into the burgeoning world of sustainable finance to fund a transition to sustainable finance. electric vehicles.
The Tokyo-based automaker is selling dollar-denominated green bonds in three parts, according to a person familiar with the matter. The longest part of the supply, a 10-year security, is expected to return 1.12 percentage points above Treasuries after an initially discussed level of up to 1.4 percentage points, the person said, who asked not to be identified as the details are private. .
This is the company’s first green bond deal, a company spokeswoman said last week. The offering is one of the largest green bonds issued by a company in the high-quality U.S. market, according to data compiled by Bloomberg.
Honda intends to allocate an amount equal to the net proceeds of the ticket issue to a range of new eligible green projects including the manufacture of electric, solar and wind-powered cars as well as investments in the recycling of used vehicle parts. , according to a bond prospectus. Ford sold $2.5 billion worth of early green bonds in November as it shifts to making electric vehicles, the biggest offering ever from a U.S. company.
Companies and governments are flocking to the green bond market to fund all sorts of eco-friendly initiatives. Global green bond sales hit a record $513 billion last year, according to data compiled by Bloomberg. The Climate Bonds Initiative estimates that annual sales could reach new highs of between $900 billion and $1 trillion by the end of this year and up to $5 trillion by 2025.
More sectors are participating in the bond market, says Stephen Liberatore, head of ESG and impact for global fixed income at investment management firm Nuveen, which oversees $1.3 trillion globally. greens in a “more robust way” is a sign of a maturing market. Liberatore, which manages about $18 billion in sustainable assets, including green, social and sustainability bonds, expects other automakers to follow.
“As someone who invests in this space, the deeper and broader opportunity set is a very big advantage, especially as an active total return portfolio manager,” Liberatore said in a video interview Thursday. . “Those are the types of things we really want to see.”
Honda, which is suspending car and motorcycle exports to Russia, was the first Japanese automaker to publicly say it would cut gasoline car sales altogether. The company has set a 2040 target, giving new chief executive Toshihiro Mibe a once-in-a-career chance to put his stamp on a company that can trace its lineage back 84 years.
JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc. and Morgan Stanley are handling the bond sale, the person said.