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ESG

Green bonds come of age in Latin America

LatAm has seen a surge in ESG bond issuance this year, as banks and corporates play catch up in the sector.

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The burst of activity from Latin American issuers in international capital markets this year has involved a large environmental, social and governance (ESG) component.

Both corporates and banks have been raising funds either through structures that funnel funds into ESG-related projects or those that have pricing triggers for the issuer’s corporate ESG goals.

On January 6, BTG Pactual was the first of the region’s banks to bring a green bond to international investors – not just this year, but ever. The Ba2/BB-rated bank sold $500 million bonds at a 2.875% yield – tightening from initial price thoughts of 3.25%.

Proceeds will be targeted at renewable energy, energy efficiency, sustainable water and wastewater management, clean transportation and green buildings. There are no ticket or diversification requirements, but eligible projects should have disbursement during the 36 months preceding the issue date or in the 36 months after it.

Patricia Genelhu, head of the sustainable and impact investing group created at BTG Pactual last year, says the bank’s focus has enabled it to lead ESG finance in the region as the sector plays catch-up.

The deal was brought by BTG Pactual, Citi, Crédit Agricole, Credit Suisse, Itaú and Santander, while Crédit Agricole was also the sustainability structuring adviser.

Itaú


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