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Outline of Transactions for Climate Response Financing Operations

As of November 26, 2021
Bank of Japan
Financial Markets Department

I. Introduction

This document is an outline of the funds-supplying operations to support financing for climate change responses (hereinafter referred to as "Climate Response Financing Operations"). The Bank of Japan conducts these operations based on the "Principal Terms and Conditions of the Funds-Supplying Operations to Support Financing for Climate Change Responses." Please note that the following information may change in the future.

II. Principles

A. Location of operations

The Bank's Head Office (Operations Department) or its branches.

B. Collateral

Collateral accepted under the basic rules concerning collateral as agreed between the Bank and its counterparties.

C. Eligible counterparties

Eligible counterparties shall, pursuant to the Bank's relevant rules, be selected from financial institutions, etc. (prescribed in Article 37, paragraph 1 of the Bank of Japan Act [Act No. 89, 1997]) and the Development Bank of Japan Inc. that satisfy the following requirements. The Bank shall review eligible counterparties annually in principle.

  1. (a) To have a current account at the Bank.
  2. (b) To be deemed sufficiently creditworthy in light of their capital condition and other relevant information obtained through the Bank's on-site examinations and so forth.
  3. (c) To disclose information on (1) and (2) below concerning their efforts to address climate change.
    1. (1) Four thematic areas (governance, strategy, risk management, and metrics and targets) in the TCFD recommendations
    2. (2) Targets and actual results for their investment or loans

D. Form of loans

Loans shall be provided in the form of electronic lending.

E. Duration of loans

The duration of each loan shall be one year in principle. Loans may be provided successively as the Bank shall disburse new loans on the maturity date of the existing loans.

F. Loan rates

The interest rate on loans shall be 0 percent per annum.

G. Counterparties

Counterparties of each loan shall be eligible counterparties that wish to receive loans.

H. Maximum amount of loans for each counterparty

The maximum amount of loans for each counterparty shall be equivalent to the amount outstanding of investment or loans by counterparties to contribute to Japan's actions to address climate change, with a remaining maturity of 1 year or more at the time (the end of March or September) determined at each loan disbursement pursuant to the Bank's relevant rules.

I. Investment or loans to contribute to addressing climate change

The investment or loans that contribute to addressing climate change shall be those that counterparties themselves determine to satisfy either (a) or (b) below.

  1. (a) The investment or loans that are listed from (1) to (5) below and comply with corresponding international standards or the Japanese government's guidelines
    1. (1) Green loans
    2. (2) Green bonds (including sustainability bonds)
    3. (3) Sustainability-linked loans with performance targets related to efforts on climate change
    4. (4) Sustainability-linked bonds with performance targets related to efforts on climate change
    5. (5) Transition finance
  2. (b) The investment or loans that are substantially equivalent to those prescribed in (a) above

J. Disclosure of information on investment or loans by counterparties

Each counterparty shall disclose international standards or the Japanese government's guidelines (I. (a)), or the contents of its own criteria it established (I. (b)), used to determine which investment or loans contribute to addressing climate change.

III. Auction

A. Notification of auction guidelines (offer)

When conducting the Climate Response Financing Operations, the Bank selects auction participants from eligible counterparties and notifies them of the following matters through the Bank of Japan Financial Network System (BOJ-NET).

  1. (a) Total amount of offer
  2. (b) Loan disbursement date
  3. (c) Maturity date
  4. (d) Bid-submission cut-off date and time
  5. (e) Loan rate
  6. (f) Other matters deemed necessary by the Bank

B. Submission of bids

By the bid-submission cut-off date and time notified in subsection A., auction participants, through the BOJ-NET, notify the Bank their desired amount of loans.

C. Acceptance of bids (notification of respective results to auction participants)

The Bank, after receiving bids as described in subsection B., accepts bids by the desired amount of loans. However, the Bank reserves the right to reject all or some of bids which a counterparty submits when deemed appropriate.

When accepting bids, the Bank, through the BOJ-NET, notifies the amount of loans to auction participants as described in subsection B. Here and hereinafter, those who receive such notifications will be referred to as borrowers.

IV. Disbursement of loans

A. Disbursement of loans

1. Submission of collateral

Borrowers submit collateral valued higher than the interest rates payable on loans, calculated based on the number of days from the day following the loan disbursement date to the maturity date, added to the amount of loans, by the loan disbursement date notified in section III. A. and the time determined by the Bank.

2. Request for disbursement of loans

Borrowers request loan disbursement by the settlement date notified in section III. A. and the time determined by the Bank.

3. Disbursement of loans

Based on subsections 1. and 2., the Bank disburses loans when it receives requests from borrowers who have submitted collateral.

The Bank disburses loans to borrowers on the loan disbursement date notified in section III. A.

B. Repayment of loans

In addition to loan amounts, borrowers shall repay loan interest to the Bank, calculated based on the number of days from the day following the loan disbursement date to the maturity date, by the maturity date notified in section III. A. and the time determined by the Bank.

Borrowers shall repay loans to the Bank on the maturity date notified in section III. A.

V. Operation Timetable

Timetable and schedule related to the operations described in section III. will be released prior to the offer.