Colombia will issue green and social bonds

Regulation & Policy    May 3, 2021 4:08 PM

César Arias, Director of Public Credit at the Ministry of Finance (MinHacienda), spoke about the next sustainable bond issue in the country.

Arias told Portafolio that the government plans to issue green bonds in July this year and social bonds in 2022.

The expert explained that these bonds are part of the Financial Plan for the next year, with which the government seeks financing alternatives.

“Colombia has completed the development of the reference framework for green bonds this year. It will submit it to an impartial review in 1Q22. We have decided to launch local auctions of the so-called green TES from July until December this year,” Arias said.

Minhacienda plans to hold one auction per month with an amount of CoP$300B, for a total of between CoP$1.5T and CoP$2T.

The government plans to allocate the resources of these green bonds to finance expenses and investments with a high impact on sustainability issues.

“These instruments have different advantages. The first is to make public policy decision makers more visible and raise awareness, and be more aggressive in meeting sustainability goals, both in investment and financing policy,” Arias highlighted.

Arias said that these bonds will be available to local and foreign investors.

MinHacienda is working on the reference framework for issuers and investors who want to bet on these bonds.

“This allows to have a clear and standard language about the responsibilities that the issuer of the bond assumes to make sustainable investments,” Arias said.

Bottom-Line: This announcement is good news for the country, as it opens the doors to a new financing alternative. A solid legal framework will be key to attract the investors’ interest to these bonds.

Banks are supporting sustainable financing in the country. Recently, the Inter-American Development Bank (IDB) and IDB Invest announced the launch of the Green Bond Transparency Platform (GBTP) as well.

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