BMV's Historic 2023: Shaping Mexico's Green Financial Landscape

The Mexican Stock Exchange (BMV) set a record in the issuance of thematic bonds in 2023, surpassing the amount raised a year before by 48% and establishing a new milestone in Mexico's financial history. With a total of 40 sustainability-focused bond offerings, the amount reached MX$131.1 billion (US$7.6 billion). This significant surge underscores the country’s commitment to fostering a more sustainable market, integrating environmental, social, and corporate governance (ESG) factors into the financial landscape.

The surge in BMV's thematic bonds is primarily driven by sustainability-linked bonds and sustainable bonds, the two main categories in terms of the number of issuances. In 2023, linked bonds reached MX$59.6 billion, representing 45% of the total bond issuance, while sustainable bonds amounted to MX$41.2 billion, constituting 31% of the overall emissions.

BMV describes sustainability-linked bonds as a form of debt instrument designed to secure funds for general corporate purposes. The distinctive feature of these bonds lies in their dynamic characteristics, which are contingent upon the accomplishment of specific sustainability goals and indicators. Sustainability-linked bonds differ from labeled bonds (such as sustainable, green, and social bonds) in that the allocated resources are intended for improving overall sustainability outcomes within a predetermined time frame, without the need to focus on a specific project.

BMV highlighted that sectors driving substantial growth in sustainable issuances include fast-moving consumer goods, financial services, and telecommunications. América Móvil stands out with the largest individual issuance of a sustainable bond, totaling MX$17 billion. Following, Grupo BIMBO secured a MX$12 billion sustainability-linked bond, and BBVA issued a green bond valued at MX$8.6 billion. Other prominent contributors to the bond placements during 2023 include FEFA, CEMEX, and Banca Mifel.

Notably, BMV has secured an 85% share of sustainable financing in Mexico, solidifying its leadership in this pivotal domain. Forty percent of Mexico's long-term debt market is now comprised of bonds carrying ESG labels, underscoring the escalating significance of sustainable financing in the country. "At Grupo BMV, we are resolutely dedicated to propelling sustainable financing. Through the concerted efforts of our exceptional team, we aspire to continue being a pivotal ally in steering the crucial transition of Mexico's economy, private sector, and financial system towards sustainable development." stated José-Oriol Bosch, CEO, BMV Group.

A week ago, Gabriel Yorio, Deputy Minister of Finance, announced that Mexico had carried out the largest-ever placement of sustainable bonds in euros for an amount of €2 billion, marking significant progress in the consolidation of Mexico's Sustainable Financing Strategy, as reported by MBN. According to the Ministry of Finance, Mexico currently holds an approximate total of US$10 billion in sustainable financing across major international markets, distributed among 10 bonds: three in euros, two in dollars, and five in yen.

At the global scale, as of January 2023, ESG bonds had raised US$2.5 trillion to support green and sustainable projects, as reported by the World Bank. In this context, the US, China, and France are the three biggest issuers of green bonds. Meanwhile, emerging market governments raised US$74 billion, representing 2% of total green, social and sustainability bonds issued globally, by that year.