Development Bank Nafin Issues Mexico’s First Green Bond

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The global green bonds market continues to expand into the developing countries which hold immense potential to attract several new investors.

Mexico’s state-owned development bank Nacional Financiera S.N.C, or Nafin, recently issued the first green bond of the country. The bank issued bonds worth $500 million for a coupon rate of 3.41% for a period of 5 years. Rating agencies Moody’s and Fitch rated the bond A3 and BBB+, respectively. The bonds are also the first in Latin America to have received Climate Bonds Certification.

The coupon rate of the bond issue possibly seemed very attractive to investors as the issue was oversubscribed 5 times; that is prospective investors were ready to pour in as much as $2.5 billion in the issue. The coupon rate was 190 basis points more than that of the 5-year US Treasury Bond.

Bank of America Merrill Lynch, Credit Agricole CIB, and Daiwa Capital Markets America were the lead managers for the issue, while Sustainalytics provided a second review for the bond issue. Bank of America Merrill Lynch is among the top 5 underwriters for green bonds issued this year so far.

The proceeds of the bond issue will be used to finance 9 wind energy projects located in various parts of Mexico.

According to the Climate Bonds Initiative, the total green bonds issuance this year has now crossed $33 billion, just shy of the 2014 total issuance of $36.59 billion. As per a report recently published by the United Nations, demand for green bonds is significantly higher than the supply. And Moody’s expects developing countries, especially India and China to play a major role in the expansion of the global green bonds market.

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