Daiwa Securities to Facilitate Investment in Japan's New Sustainability Bond

Introduction

Daiwa Securities Co., Ltd., led by President Akihiko Ogino, has announced that it will act as the underwriter for an upcoming sustainability bond to be issued by the Independent Administrative Institution Water Resources Agency (WRA). This bond, the 23rd in the series, is scheduled for issuance in the third quarter of fiscal 2025 and will be available for purchase through all Daiwa Securities branches across Japan.

Sustainability Bond Overview

The sustainability bond is accessible to a range of investors across the country, specifically targeting institutional clients. Investors who purchase this bond can also publicly express their investment declarations, demonstrating their support for the initiatives funded by this bond. The names of these contributing institutions will later be published on the WRA's website, and they can link back to their own sites as a testament to their commitment.

An investment declaration is a formal way for an investor to acknowledge their support for the significance of the projects financed by the bond and the mission of the WRA. This engagement not only highlights their endorsement of water resource management but also encourages responsible investment practices.

The Role of the Water Resources Agency

The WRA operates with the foundational principle of providing safe, high-quality water at stable, low prices. It manages the entire water supply chain—from water sources to distribution networks—fulfilling a public mission that balances various stakeholders, including local governments and industries that rely on water resources.

The agency manages water resources across seven river basins: Tone, Ara, Toyo, Kiso, Yodo, Yoshino, and Chikugo. These basins account for approximately 17% of Japan's land area but host around 53% of the population and contribute significantly to industrial output, representing roughly 41% of Japan’s total. Notably, the WRA is responsible for about 83% of the developed water volume in these river systems.

Emergency Response and Environmental Contributions

In addition to its core mission, the WRA addresses challenges such as droughts, floods, and earthquakes. During natural disasters, the agency plays a crucial role by adjusting facilities to manage floodwaters and mitigate damage. For instance, during heavy rainfall conditions, they proactively utilize dam and river structures to control flood risks.

The WRA is also equipped to support disaster relief efforts. Following the Noto Peninsula earthquake in 2024, they dispatched portable water purification systems to provide drinking water and sent personnel to inspect and ensure the safety of water reservoirs. These efforts not only reflect the agency's resilience but also its commitment to serve public needs during crises.

Commitment to SDGs

Through its comprehensive projects—including stable water supply, drought mitigation, flood prevention, renewable energy, and environmental conservation—the WRA significantly contributes to achieving the United Nations Sustainable Development Goals (SDGs).

The sustainability bond, therefore, holds dual value: it not only supports environmental improvement but also aims to solve social challenges, qualifying it for third-party evaluation by Rating and Investment Information, Inc. (R&I). Funds raised from this bond will finance new construction projects, including dams and water distribution systems, as well as refinance previous projects directed at sustainable water resource management.

Bond Issuance Details

Here are the preliminary details regarding the bond issuance:

- Term: 3 years
- Issuance Limit: Up to 8 billion yen
- Issuance Timing: Third quarter of fiscal 2025
- Lead Underwriters: Daiwa Securities (Administrative Lead) / Mitsubishi UFJ Morgan Stanley Securities

For more information on this bond and purchasing options, please contact your nearest Daiwa Securities branch.

Conclusion

This sustainability bond offers a unique opportunity for corporate investors to partake in essential water resource initiatives while aligning their investments with broader social and environmental goals. By supporting the WRA's mission, these investors are not only ensuring responsible management of precious water resources but also demonstrating their commitment to sustainable practices and community welfare.