Mexico City — Debt issuances of green bonds, linked to sustainability or with environmental, social and governance (ESG) purposes, have become active again on the Mexican Stock Exchange (BMV) in mid-2023, with BMV data showing that 39% of total debt placements correspond to labeled bonds and total 55 billion pesos ($3.22 billion) in value, equivalent to 44% of the total issuances.
Green bond issuances are focused on managing risks, according to BBVA Investment portfolio manager Alan Vazquez, who explained that this type of placements help to improve the credit profile of companies and allow them to access better funding costs, and thus be able to align interests among different stakeholder groups.
“As ESG issuances increase in Mexico, the market matures in a natural way with its more developed peers, issuers can fund themselves at lower cost due to an improvement in their credit profile, mitigate a wider spectrum of risks, and encourage investment in sustainable projects,” Vázquez told Bloomberg Línea.
Recent issuances
The percentage of issuances was boosted by two bonds that were launched recently on the Mexican market, by Internacional de Inversiones (IDEI), a real estate developer based in Monterrey, Nuevo León state, which issued a green bond linked to sustainability for 800 million pesos ($46.9 million).
That bond was the first of its kind to be issued in the real estate sector. With this instrument, the company, which already has buildings with LED or EDGE certification, commits to increasing the percentage of such evaluations. In particular, IDEI is committed to improving efficiency between 20% and 40%, according to its placement prospectus.
This week, Inversiones CMPC, a Chilean pulp and paper company, made its debut on the Mexican debt market through the placement of two sustainability-linked bonds for a total of 3.2 billion Mexican pesos ($187.7 million).
The green bond was for an amount of 1.6 billion pesos ($93.8 million), for a term of two years, while the sustainability-linked bond was for an additional 1.6 billion pesos for nine years, at a fixed rate of 10.62%.
With these instruments, Inversiones CMPC is committed to achieving net zero emissions by 2040, reducing water use per ton by 25%, and adding 100,000 hectares of conservation and protection by 2030, according to the placement prospectus.
The CEO of the Mexican Stock Exchange, José-Oriol Bosch, announced at the beginning of June that in the following months close to 70 billion pesos ($4.1 billion) in long-term debt will be placed. Of this total, 35% will correspond to ESG bonds and bonds linked to sustainability such as the issuances by Arca Continental, BBVA, Grupo Herdez, Megacable Holdings and the state of Mexico.
Oriol-Bosch predicts that this type of issuances will represent 60% of the total of debt issued on the BMV.
