IDB Investa solutions bank for the private sector in Latin America and the Caribbean, yesterday signed a Infrastructure social bond of US$259 millionissued by the Spanish company Sacyr and which is part of a total long-term financing of US$800 million for the 4G Rumichaca-Pasto road project.
(The OECD recommendations to Colombia to improve its economy).
Apart from the social bond, the financing includes a multi-tranche bank loan of US$278 million and another of US$260 million.
The social bond issued is the largest of its kind in Latin America for an infrastructure project.
sacristan gem, director generatesThe IDB Invest business spoke with Portfolio about the operation.
What is the social importance of the project in which IDB Invest participated?
This project will increase the Regional integrationby connecting the border crossing between Colombia and Ecuador with Pasto, improving the connection of the southwest and the border with Ecuador, promoting the commercial integration of the countries, it will reduce travel time and increase road safety.
Reduce transportation costs and will benefit 150,000 inhabitants of seven municipalities and helps to connect the indigenous and peasant areas. The works have generated almost 13,000 direct jobs.
(Colombia, to reduce costs with satellite agreements with Luxembourg).
This is interesting and an advance for Colombia, because despite the fact that the bond was not invested in Colombia, it gives the opportunity for projects to be financed abroad.
In what other social issues has IDB Invest participated in Colombia?
In the last two months, IDB Invest has subscribed three thematic bonds in three different segments: Compañía de Empaques; Mibanco and Sacyr, with innovative instruments in the capital market. We did the operation with Goldman Sachs and JP Morgan.
What other projects have they contributed to?
In recent years, we have participated in six with IDB Invest and the IDB in five with public entities.
We have supported Bancolombia, then Compañía de Empaques, La Hipotecaria, Davivienda’s first gender bond, another similar one from Banco W, and recently MI Banco’s bond.
This one from Sacyr is the first infrastructure in Colombia.
We are very interested in continuing to innovate in the capital markets and this year in a couple of opportunities in thematic bonds. The capital market agenda and social bonds it will have another axis that is financial inclusion, with excluded sectors, other immigration, additionally in alternative energies and they will also come for electromobility. We want to support the green mobility and renewable energy agenda.
How is Colombia in the issuance of social bonds?
In Latin America, Sacyr’s bonds are the 24th issue that we support. In the region, sustainable investment began in Brazil and was followed by Mexico, but Colombia has quickly presented several initiatives and in 2012 it launched the Asobancaria green protocol, then the Colombian Stock Exchange was the first in Hispano-America certified by the ‘Global Reporting Initiative’, in 2019 the foundations of the green taxonomy were presented, then the country renewed the emission reduction commitments and sustainable policies, as well as the guides of best sustainable practices.
Colombia it was the first country in the region to issue a domestic sovereign green bond in local currency. Chile did it but in dollars. Then Bogotá was the first city to issue a social bond for higher education and also last year a protocol for sovereign green bonds was approved.
(Non-traditional sectors that have gained prominence in exports).
We see more offers, investment opportunities and more interest in the institutional investor and natural persons. In addition, there are 30 investors adhered to the Principles of Responsible Investment.
The Financial Superintendency also issued regulations for companies to report information with environmental, social and corporate governance criteria in line with international methodologies and asked entities to include climate risk analysis not only as a reactive issue, but as investment opportunities.
What else can the country do in social emissions?
There is a very broad green agenda, with green hydrogen, electromobility. Also in the social issue looking for specific issues in gender and inclusion. Colombia is the country that has issued the most gender bonds in the world, there are four in the world, there are 20.
There are also opportunities to finance issues of diversity and inclusion, housing and social infrastructure such as education or health.
With the gender agenda Colombia, as a country, can issue a gender bond. We believe that Colombia is taking the lead from 2021 and could be the first country with a sovereign social bond in local currency.
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