As part of its international program, Climate Bonds has been actively engaging LATAM countries to help the development of their domestic green bond markets.
Mexico: Here’s an update on the latest developments
New Green Bonds Working Group Formed - Potential for USD 2Bn of Green Bonds in 3 Years
In a wide ranging interview looking at local market prospects with leading business publication El Economista, Climate Bonds CEO Sean Kidney has forecast that Mexico could see green bonds issuance reach over USD 2Bn in three years.
Kidney's visit was part of a wider program of meetings with investors, insurers and financial institutions to encourage the growth of green bonds and green investment in Mexico.
Mexican Bourse BMV & Mexico2 Form Green Bonds Working Group
The El Economista interview coincided with the announcement that the Mexican Stock Exchange (Bolsa Mexicana de Valores - BMV) has formed a Climate Bonds Working Group. This will bolster the development of a green bonds market in Mexico and facilitate funding for low carbon projects that help fight climate change.
Speaking in Mexico City at the launch of the new group, Sean Kidney described Mexico as a leader in LATAM for green bond development. He pointed to NAFIN’s successful 2015 issuance of a USD 500M ‘Climate Bond Certified’ Green Bond, a first for Mexico and South America.
In March 2016 BMV launched a segment dedicated to green bonds in order to help channel investment into low-carbon projects. This was developed in partnership with Mexican Carbon Platform Mexico2, the IFC, the British Embassy and Mexico's Ministry of Environment and Natural Resources.
“Mexico can lead” Kidney Tells El Economista
"We are looking for leadership in the region (...) Mexico is one of the most suitable countries to provide that leadership…” El Economista quotes Kidney.
"In Mexico, I would have the goal of over 2,000 million dollars in bonds. We have 500 million [already], but we need to encourage participation from Mexico City and BBVA Bancomer.”
"We are laying the groundwork for a much larger year to follow (2017). This year we seek to establish the market and educate the financial community."
Climate Bonds Initiative has estimated that globally it will take three years to develop the market for green bonds and "Mexico must develop in the same period," he said.
“Liquidity problems will be resolved in the first year. For the second year, we need to provide design incentives and in the third, project-based bonds and securitization of green credits, such as credits for green homes.”
More Green Bonds in the Mexican Pipeline?
According to Eduardo Piquero, director of Mexico2, there could be more issuance on the Mexican Stock Exchange (BMV) if market conditions permit; "There are three green bonds that are in different stages of development that could be issued this year."
There is a pipeline of projects for funding identified in the country, including Metrobus lines in different cities and wastewater treatment plants, among others.
"We have a short list of projects, but we need to develop at greater speed if we really want to combat climate change," he said.
The Last Word
The formation of the Working Group is a vital step in maintaining the momentum established by Nafin and BMV; helping to meet Mexico’s urgent needs for green finance across a range of projects.
Convening institutional investors, development, multilateral and investment banks, corporate and fiscal lawyers, consultants, certifiers and financial associations will provide impetus to aligning the financial system with the nations development goals.
Mexico’s lead could also be used as a model by other LATAM nations.
Climate Bonds will continue in-country policy engagement with government, investors and NGOs and support the development of local and regional green bond markets.
We’ll keep you posted.
Coming soon: Updates from Colombia and Brazil. ¡Hasta Pronto!
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