First green government bonds

Regulation & Policy    May 18, 2021 6:03 PM

The Colombian government is preparing to issue its first green bonds in the second half of 2021.

Authorities will look to raise between CoP$1.5T and CoP$2T with these bonds, Forbes Colombia reported.

Colombia could position itself as the first country in Latin America to issue green sovereign bonds in local currency, said a report by Casa de Bolsa.

The document said that the issuance is based on a green financing strategy that includes four pillars: institutional framework, international agreements, development of the capital market and greening fiscal policy and business.

The report said that green bonds will have a maturity between 10 and 15 years and monthly auctions for CoP$300B between July and December 2021.

The government plans to place a similar number of green bonds in 2022.

Casa de Bolsa explained that the Ministry of Finance (MinHacienda) contemplates five main pillars for the use of the resources: adaptation to climate change, renewable energies, water management, protection of biodiversity and sustainable transport.

It is important to remember that Colombia began issuing project bonds since 2016, with corporate entities being the first to place green bonds.

“To date, these corporate bond issues reach CoP$2.8T, registering several bids to cover of up to 2.6x on the amounts offered,” Casa de Bolsa 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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