Colombia’s green bonds

Regulation & Policy    Jun 18, 2021 5:18 PM

The Colombian government will issue the first green bonds in local currency.

The operation of this bond is scheduled to start in July this year and with the government expects to raise between CoP$1.5T and CoP$2.0T.

Juan David Ballén, Director of Analysis and Strategy of Casa de Bolsa, told Valora Analitik that sustainable investments are booming worldwide.

The expert said that Chile has been the country that has taken the lead in the region.

“Green bonds will be the first green sovereign debt bonds denominated in local currency in the region,” Ballén said.

Ballén said that climate change has generated greater interest in these investments.

“Investing in these types of securities mitigates environmental risks in investment portfolios. In addition, it demonstrates a commitment to the sustainability of our planet,” Ballen said.

The expert added that these issues lower the financing cost, which is favorable considering that Colombia lost its investment grade.

“The green bonds will incentivize sustainable investments in the country and demonstrate that the government is committed to climate change,” Ballen said.

The expert said that the government will be naturally hedged as the resources will be spent in Colombian pesos.

“Based on experience in other countries, the demand for these types of securities tends to be higher and more diversified than the demand that traditional bonds receive,” Ballen said.

Bottom-Line: The energy transition will require enormous resources, and these bonds are a good alternative to finance this process.

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