NYK Line has secured two sustainability loans totalling $804m amid a growing number of Japanese banks focusing on environmental, social and governance (ESG) standards.
With the rapid expansion of sustainability funds across the globe, more shipping companies have turned to ESG investors to meet their liquidity requirements in recent quarters.
In a statement, NYK said it signed up for a revolving credit facility of $600m with Sumitomo Mitsui Banking Corp (SMBC) to fund its business.
The Japanese shipping conglomerate separately sealed a five-year loan of $204m from Iyo Bank, Bank of Saga, Shikoku Bank, Nomura Trust and Banking Co, Hachijuni Bank and MUFG Bank for the same purpose.
MUFG will also act as the agent for the term loan.
The banks have required NYK to maintain a high climate change disclosure score as assessed by non-profit organisation CDP.
“As long as high CDP ratings are achieved, the interest rate terms will remain unchanged until the repayment deadline,” the Tokyo-listed company said.
Terms of both loans are in line with the Sustainability Linked Loan Principles set forth by the Loan Market Association and other organisations.
SMBC and MUFG are signatories to the Poseidon Principles, which provides a framework for aligning ship-finance portfolios with the International Maritime Organization’s decarbonisation targets.
Major Japanese shipping firms have been able to tap into ESG financing amid their fleet-renewal efforts in recent years.
In February, NYK clinched what it claimed to be Japan’s first foreign currency sustainability loan with Shiga Bank.
The four-year loan totalling $50m has an interest rate linked to the company's performance on environmental awareness, sustainability governance and leadership in addressing climate change.
This came after NYK inked a ¥50bn ($451m) revolving facility with Norinchukin Bank, Mizhuho Bank, SMBC and MUFG in 2019.
Japanese rivals Mitsui OSK Lines and K Line have also managed to secure green financing from financial institutions such as BNP Paribas, Mizuho Bank and Sumitomo Mitsui Trust Bank to fund their LNG shipping projects.
Morningstar data showed total assets in Japanese sustainability funds reached $17.7bn at the end of 2021, up by more than 40% from the end of September.
This remained a small proportion of the aggregate size of sustainability funds globally, which amounted to a record high of $1.65trn as of the end of December.
