IFC issues first Peruvian Soles-denominated PEN 118m ($42m) green bond, for domestic investor RIMAC Seguros, AAA, 20yr. A fantastic kick-start for a domestic green bond market in Peru?

  • First multinational issuance in Peru
  • First insurance company in Latin America to invest in Green Bonds

A new 20 year bond issued by IFC in Peruvian currency (PEN), PEN 118 million (approximately USD 42 million). AAA, 20 year, zero-coupon with an implied yield of 5.3% p.a.

It's exciting, despite it’s modest size, because the issuance is in local currency and is designed for a domestic investor.  RIMAC Seguros, Peru’s leading insurance company, is the “sole investor in the bond” according to the IFC press statement. JP Morgan was the lead manager on the transaction.

It's not just investors in Europe and Norh America who are interested in green bonds - we regularly get emails from around the world asking about local availability. Domestic investors generally have their largest allocations to local currencies, partly so they can avoid foreign exchange risk - so they're looking for local currency green bonds. This is, for example, an issue for big insurance funds who have taken a leadership position in green finance - and who match assets and liabilities locally.

Bond markets generally start with high grade issuance from public sector bodies, then move on to corporates, municipals and asset-backed; we're already seeing this happen in the European and US green bond markets, kickstarted by multinational development banks. Potential local issuers then become aware of the opportunities, investors slowly develop appetite, and bingo (assuming no disasters) we're away. IFC has been explicit in saying that the Soles denominated bond is part of a strategy to grow the green bond market "multi-directionally".

IFC's Evelyn Hartwick told us today that their focus this year "will be to grow the supply and the buy side in emerging markets, both by issuing IFC's green bonds in local market or emerging market currencies and by offering a number of regional 'Green Bond Teach-ins' for Corporates with green portfolios."

Will we look back on this IFC PEN bond as the beginning of a domestic Peruvian green bond market? Hopefully!

As with all IFC green bonds the inclusion criteria have been reviewed by CICERO.