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Mexico Issues "Historic" UN Goals-Oriented Sovereign Bond

By Peter Appleby | Tue, 09/15/2020 - 14:12

Mexico has issued the “world’s first” sovereign bond that is connected directly to the UN’s objectives, Deputy Finance Minister Gabriel Yorio announced yesterday.

In a video posted on Twitter, the minister detailed the process of issuing the sovereign bond which, he explained, would position Mexico as a “pioneer” in the sustainable finance market.

México es el primer país en emitir un #bono soberano #sustentable vinculado a los objetivos de desarrollo de la #ONU. Así, nuestro país inicia su programa de financiamiento sustentable, colocándose a la vanguardia en este tipo de instrumentos financieros.

Les dejo este video👇🏼👇🏽

— Gabriel Yorio (@GabrielYorio) September 14, 2020

“Today, I want to tell you that we have finished issuing the first sustainable bond in the world that is connected to the UN’s sustainable development goals. These objectives aim to acknowledge the policies that countries have to reduce inequality, promote financial inclusion and reduce the gender gap,” Yorio said.

The bond was issued in the euro-dominated market and raised a reported US$889.73 million. Deputy Minister Yorio noted that the demand for the bond was five-times the amount issued, around US$4.8 billion.

The Ministry of Finance said that the 1.350 percent coupon is the second lowest rate ever issued in euro-dominated bonds by the Mexican government,

The minister noted that the bonds are targeted at companies that have a high level of commitment to sustainability practices and sustainable development. There are around 3,000 inversion funds dedicated to sustainable development in the world, worth some US$8 billion, he added.

The UN Development Program (UNDP) hailed the success of Mexico’s new sustainable sovereign bond calling it “historic” and saying that it is “an important step forward in the country’s commitment to achieve the SDGs and a major advance for development finance.”

The UNDP explained that the bond had been issued under the SDG Sovereign Bond Framework, released in February this year with the support of investment bank Natixis.

Mexico’s sustainable sovereign bond adds another option to the growing number of ESG-compliant bond alternatives that are now available in the Mexican markets. Earlier this year, Banco Santander launched its SAM-ESG equity investment fund which became the first sustainable fund in Mexico. Citibanamex-BlackRock followed just days later with their Global ESG Balanced Strategy in Foreign Currency fund, backed by MSCI.

ESG bonds have enjoyed a huge increase in popularity worldwide over the last couple of years as companies diversified their bond options in response to a growing concern around sustainability and the environment. In January, international law firm Linklaters LLP reported that “2020 is set to be a ‘bumper’ year for green bonds, driven by new set of standards in Europe and increased activity in Asia.

Peter Appleby Peter Appleby Journalist and Industry Analyst