Mexican Government Places Second ESG Bond

The Ministry of Finance and Public Credit (SHCP) placed a second environmental, social and governance (ESG) bond, as Mexico continues to lead the region in the implementation of sustainable financing strategies. 

The new benchmark sustainable bond is set in dollars with maturity in 2053. It is part of Mexico’s Sustainable Financing Strategy. The SHCP highlighted that the bond is the ninth international sustainable bond issued in financial markets during the current administration, according to a press release. 

“This latest issuance is the largest for an ESG (Environmental, Social and Governance) carried out to date, which reflects the commitment of the Government of Mexico to sustainability and responsible investment. With this action, Mexico consolidates as a leader in the issuance of sustainable bonds in the region,” explains the Treasury in a press release. 

The Mexican government specified that favorable market conditions allowed a debt reduction of its portfolio in foreign currency of US$368 million, which was a major step for the management of the country’s external debt. The liability management operation in international markets was executed to deleverage Mexico’s foreign currency portfolio by taking advantage of bonds with maturities between 2041 and 2052, trading at considerable discount prices.

The Treasury explained that investors were offered a bond exchange for the new sustainable bond. Bond exchanges reached US$1.59 billion, allowing the country to deleverage US$368 million. 

Mexico’s new 30-year benchmark bond was issued for a total amount of US$2.9 billion, with a coupon rate of 6.338%. The Treasury highlighted that the issuance represents the largest ESG bond to date, making Mexico a leader in sustainable market development. The demand for the bond reached 4.1 times the initial amount, reaching US$12 billion with the participation of over 300 institutional investors. 

Mexico’s sustainable financing strategy has already been recognized by international organizations. SHCP recently announced that the country received two international awards, one from Environmental Finance for its BONDES G bond and another from the Climate Bond Initiative for the "Largest sustainable and social sovereign bond." The SHCP explained that Mexico’s management of its public debt was the major factor in the recognition, as reported by MBN.