The Mexican Government Issues MX$15 Billion in Sustainable Bonds

The Ministry of Finance and Public Credit (SHCP) launched the fifth issuance of BONDESG in the local financial market on Oct. 25, 2023. The first release of this kind of sustainable government debt instrument took place in 2022.

The fifth placement of BONDESG was issued under the framework of Reference for Sovereign Bonds linked to the Sustainable Development Goals (SDG). This issuance is part of the Sustainable Financing Mobilization pillar within the Sustainable Financing Strategy, which aims to create a conducive environment for transforming debt and capital markets to enhance and direct financial flows toward sustainable projects and activities.

The bond was issued according to the following terms: 1.7 years for MX$3.7 billion (US$207.5 million), 2.4 years for MX$6 billion, and 4.4 years for MX$5.2 billion, with yield spreads of 0.1380%, 0.1745%, and 0.2201%, respectively. Approximately 31 domestic investors participated, and the total demand reached MX$60.5 billion, which is equivalent to 4.04 times the amount placed.

SHCP conducted the first issuance of BONDESG almost two years ago, in May 2022. The inaugural placement of the bonds was organized in two terms, the first one of two years for MX$14.5 billion and the following one for six years for MX$5.4 billion. It involved the participation of 35 domestic investors, with a total demand of MX$64.6 billion, which was 3.2 times the amount placed.

According to SHCP, after the inauguration of its sustainable debt market, Mexico became one of the first countries worldwide to issue government debt instruments linked to the new risk-free benchmark rates. "The new BONDESG will boost the development of sustainable instruments in Mexico. Companies can use them as a benchmark to issue their own ESG instruments in pesos, and access more affordable financing for their sustainable projects,” stated SHCP back in 2022. 

Between 2020 and 2022, the Mexican government witnessed a remarkable 419% surge in green bond issuing. By August 2023, these investments had reached MX$122.01 billion, as reported by MBN. 

The fifth issuance of BONDESG aligns with the Federal Public Debt Law, adhering to the borrowing limits established by Congress for the fiscal year 2023. It is also an integral component of the annual financing program.

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