Sumitomo Mitsui Banking Corporation (SMBC) has recently announced that it will create a new class of instruments to sell project finance debt securities in Japan.

The new instruments will be created by securing loans to infrastructure projects. With this new instrument, the investors will be entitled to a percentage of the project's earnings once completion. Additionally, the securities will be shown to the investors clearly rated to give them real knowledge of the risk.

SMBC has already offered US$26.3 million of these new instruments for the financing of a large-scale solar power project in Tochigi Prefecture, Japan, to institutional investors. With this new modality of project finance debt, it is expected higher returns than straight corporate bonds of similar class.

According to SMBC, the market for this new project finance instrument in the renewable energy field could grow to approximately US$890 million. Additionally, SMBC is considering the selling of the instruments to, among others, pension funds and retail investors.