Honda joins Ford by selling green bonds in electric vehicle push

[NEW YORK] Honda Motor is selling bonds meant to benefit the environment for the first time, joining its competitor Ford Motor in tapping the booming world of sustainable finance to fund a transition to electric vehicles.

The Tokyo-based automaker is selling dollar-denominated green bonds in as many as 3 parts, according to a person with knowledge of the matter.

The longest portion of the offering, a 10-year security, may yield between 1.35 percentage points and 1.4 percentage points above Treasuries, said the person, who asked not to be identified as the details are private.

It would be the company's first green bond deal, a company spokeswoman said last week.

Honda intends to allocate an amount equal to the net proceeds from the note issuance to a range of new eligible green projects that includes manufacturing electric cars, solar and wind along with investments in recycling used vehicle parts, according to a bond prospectus.

Ford sold US$2.5 billion of debut green bonds in November as it transitions to making electric vehicles, the largest ever such offering from a US corporation.

Companies and governments are rushing to the green bond market to finance all kinds of environmentally-friendly initiatives.

Global sales of green bonds hit a record US$513 billion last year, according to data compiled by Bloomberg.

Climate Bonds Initiative estimates annual sales could reach fresh highs of between US$900 billion and US$1 trillion by the end of this year and as much as US$5 trillion by 2025.

Honda, which is halting exports of cars and motorcycles to Russia, was the first of Japan's automakers to state publicly it will phase out sales of gasoline-powered cars completely.

The firm set 2040 as the goal, giving newly minted chief executive officer Toshihiro Mibe a once-in-a-career chance to put his stamp on a firm that can trace its lineage back 84 years.

JPMorgan Chase, Bank of America, Citigroup and Morgan Stanley are managing the bond sale, the person said. BLOOMBERG