Photo: Climate Bonds Initiative
A new initiative to further green finance in Latin America
On 24 October, Bolsa de Valores de Panamá (BVP) launched its Guidelines for issuing Social, Green and Sustainable (SGS) Bonds, an important milestone towards the development of sustainable investment in Central American markets. It is the first report of its kind focused on the region.
The launch event, at BVP’s headquarters in Panama, gathered key local stakeholders and institutional investors. Carbon neutrality to compensate for the 8 tons of carbon generated was certified by Mexico2.
The SGS Guidelines from BVP are intended to offer market players a guide comprising international best practices and local parameters for the issuance of SGS bonds and for assessing eligible assets.
A few highlights are:
- Benefits for both investors and issuers;
- Definitions and Processes for Social, Green and Sustainable Securities;
- Overview of International Standards;
- A practical guide on how to issue a Social, Green or Sustainable bond.
Bolsa de Valores de Panamá (Panama Stock Exchange) is the capital market infrastructure operator in Panamá providing services to local and regional issuers and investors. BVP’s mission is to develop Panamá’s capital market, the integration of other markets in the region and become the regional trading hub for local and regional issuers and investors, whose objective is to promote the stock market for the financing of companies in a transparent and efficient manner.
Green Finance in Central America
During the last 5 years, there has been a global increase in the demand for investment opportunities for mitigation and adaptation towards climate change, the creation of a positive social impact and sustainable development, mainly by the institutional investors coming from the member states of the Organisation for Economic Co-operation and Development (OECD).
Recent data from our Latin America and Caribbean State of the Market 2019 report show that Green finance growth is expected across the region, driven by much needed investments in green infrastructure. Sustainable agriculture and blue (ocean-based) activities also present opportunities. Our analysis of climate-aligned issuers has revealed greatest potential for green bond issuance among energy and water companies. Several potential public sector issuers were also identified across the region.
The new Guidelines are an essential part of a wider transition initiative towards low carbon as well as an important tool for Central America in financing key sectors such as energy, transport and infrastructure.
Olga Cantillo, CEO, Bolsa de Valores de Panamá:
“We are pleased to launch this guideline for the issuance of social, green and sustainable bonds with international standards, such as those of Climate Bonds Initiative. This important step is crucial to our commitment of providing our listed companies with best ESG principles when issuing responsible and impact bonds to local and international investors.”
Justine Leigh-Bell, Deputy-CEO, Climate Bonds Initiative:
“The launch of BVP’s Guidelines establishes an important benchmark for market development in Panamá. Exchanges play a key role towards enabling investments and BVP is to be congratulated on taking a lead in with the SGS. Over time we expect the Guidelines to boost green and sustainable investment locally and in the region. It’s a pleasure to work together with BVP as a Climate Bonds Partner on such significant projects.”
The last word
We expect the guidelines to help catalyze green finance in Central America and demonstrate to issuers and other market players the processes and benefits of issuing green, social and sustainability bonds.
Recently we have already seen a successful inaugural green bond for Panamá from the Inter-American Corporation for Infrastructure Financing (CIFI) in the Panamanian market. On 1st November the Central American Bank for Economic Integration (CABEI) issued a US$375 million green bond, oversubscribed by 3.2x.
There is space for much more from corporates, banks, insurers and MDBs in both green bonds and loans to meet investor appetite especially if combined with supportive policy and further stock exchange initiatives.
Congratulations to BVP on this step forward.