Latin America: Mexico leads way in green-bond push
Some landmark deals from international banks are pioneering the green-bond structure in Latin America. But until the region begins to sell in local currency to local investors, the potential will remain unfulfilled.
On a patch of wasteland that once sat at the bottom of Lake Texcoco on the northeastern fringes of Mexico City, work is underway to build the world’s most environmentally sustainable airport – a project funded in part by Latin America’s largest-ever green bond.
The $2 billion dual-tranche deal issued by Mexico City Airport Trust in late September lifted the number of internationally marketed Latin American green-bond sales this year to five. That might seem like small change but it is almost double all previous issuance since Dealogic started tracking green-bond transactions in 2007.
That uptick in deals comes at a stage when global green-bond issuance continues to hit new highs, with $53 billion raised at the start of October – smashing the previous record of $36 billion issued during 2015.
While the number of Latin American green bonds is dwarfed by those issued in Europe and Asia, the recent surge of deals underscores the potential for growth in the region as issuers and investors become familiar with the product.