NYK gets first transition loan to fund fuel-efficient vessel projects

January 29, 2024, by Naida Hakirevic Prevljak

Japanese shipping company Nippon Yusen Kabushiki Kaisha (NYK) has secured its first transition syndicated loan to finance projects for reducing greenhouse gas (GHG) emissions such as constructing next-generation fuel vessels.

On January 26, NYK concluded the loan agreement with MUFG Bank and other creditors.

Specifically, the loan amounts to $300 million and its proceeds will be used for new and existing projects referenced in the “vessel fuel conversion scenario towards 2050” in NYK’s medium-term management plan. Examples include LNG- and LPG-fueled vessels.

It is the shipping company’s first transition loan based on the 2021-developed NYK Green/Transition Finance Framework. Under the framework, the company established green/transition financing criteria involving the use of proceeds, evaluation, selection of projects, and management and reporting of funds raised.

Twenty-one financial institutions from Japan and overseas that support NYK’s Environmental, social, and corporate governance (ESG) management participated in the loan.

As explained, NYK concluded the loan to accelerate ESG management advocated in NYK’s medium-term management plan “Sail Green, Drive Transformations 2026 – A Passion for Planetary Wellbeing-.“

Securing various funding resources for decarbonization solutions will help NYK to accelerate its greenhouse gas emission reduction. NYK issued the shipping industry’s first green bonds in 2018 and Japan’s first transition bonds in 2021.

In 2019, the shipping player also obtained Japan’s first sustainability-linked loan, provided by MUFG Bank.

In related news, NYK, together with Japan Engine Corporation, IHI Power Systems, and Nihon Shipyard, signed last week a series of contracts to build the world’s first ammonia-fueled medium gas carrier (AFMGC) equipped with Japan-made engines.

To be built at the Japan Marine United Corporation (JMU) Ariake Shipyard, the 40,000 cbm type ammonia fuel ammonia carrier is scheduled for delivery in November 2026.