The first sovereign transition bonds in the world were launched in Tokyo

Japan held its first-ever global bond auction for sovereign climate transitions on Wednesday, but the demand for the bonds was marginally lower than anticipated.

A relatively new class of bonds called climate transition bonds seeks to finance businesses' — in this case, governments' — moves toward less environmental impact. They are not to be confused with green bonds, where the proceeds are allocated to a particular project or are concentrated on the issuer's profile.

The first tranche of Prime Minister Fumio Kishida's proposal to issue 20 trillion yen of climate bonds over the next ten years to support the country's aim of reducing greenhouse gas emissions to zero by 2050 was sold today, with 800 billion yen ($5.3 billion) in 10-year transition bonds.

Projects like inexpensive wind power generators and alternative fuel-powered aircraft are anticipated to benefit from the proceeds.

On Wednesday, the bonds were priced at 0.74% yield, which was a little less than anticipated. The bonds' yields in the "when-issued" market — a market for securities that haven't been issued yet — were 0.655% a day earlier. Bond yields follow prices inversely.

On February 27, Japan's finance ministry intends to issue 800 billion yen of five-year transition bonds. A fiscal year later, in April, 1.4 trillion yen of transition bonds will be sold.