IDB Invest, Banco Bolivariano Announce the Issuance of the World's First Blue Bond with Targeted Incentives
IDB Invest and Banco Bolivariano announced the issuance of a blue bond with incentives linked to meeting objectives, the first of its kind in the world. The $80 million bond has been subscribed with an investment from IDB Invest of $40 million and another from FinDev Canada for $40 million.
The resources from the bond placement of the bond have as their main purpose the conservation of the oceans, through the promotion and expansion of access to credit for the sustainable production of shellfish; water and wastewater management; and solid waste management and the circular economy. Likewise, the issuance includes a fair transition component by promoting the participation of micro, small, and medium-sized enterprises (MSMEs) in the supply/value chain in the different uses of funds.
This is the first blue bond that has incentives for meeting objectives, among which the adherence to the principles of the Working Group for the Disclosure of Nature-Related Financial Information (TNFD) stand out. This will be an important milestone for Banco Bolivariano, as it will be one of the first banks in the region to join the TNFD. In the event of failure to meet the objectives, a fee will be paid to investors by the issuer.
As part of the bond issuance process, IDB Invest accompanies Banco Bolivariano with an advisory service whose objective is to define its roadmap to align with the recommendations of the TNFD framework, help the lender's clients get training on the measurement reporting of environmental risks, and design the methodological framework for the use of funds. This contains the criteria for selection, monitoring and evaluation of projects, aligned with internationally accepted principles for blue emission. IDB Invest also supported Banco Bolivariano in obtaining an independent verification of the methodological framework, known as a second-party opinion, issued by Sustainalytics (a Morningstar company), an external consultant specialized in this type of project.
Marisela Alvarenga, Managing Director for IDB Invest’s Financial Sector, said: "This deal ratifies IDB Invest's commitment to sustainable finance in the region, through a new class of assets that helps promote responsible management of the oceans. We are also pleased to be catalysts for impact, attracting new investors who support sustainable initiatives, mobilizing available capital to finance companies committed to oceans, water and sustainability on a larger scale."
The increase in sea temperature, the acidification of the oceans and the rise in sea level are consequences of climate change. These changes have serious consequences for marine ecosystems, such as coral bleaching, habitat destruction, and altered migratory patterns. Blue Bonds are an innovative instrument designed to raise capital for projects aimed at conserving and restoring the ocean and harnessing the potential of sustainable marine industries, such as fishing, aquaculture and renewable energy, to generate income while promoting conservation efforts. conservation and restoration of the marine ecosystem, and sustainable activities are generated for vulnerable populations and MSMEs.
“At Banco Bolivariano, we are proud to issue the first blue bond with incentives linked to meeting objectives. We join the efforts to support the environmental goals that Ecuador has set, and in this sense, we will promote the financing of projects related to water that incorporate practices with high environmental and social standards, with the objective of solving the challenges related to the blue economy. We thank IDB Invest and FinDev Canada for their support in this process," said Vicente Vallarino, Banco Bolivariano’s Executive President.
With this issuance, IDB Invest reaffirms its commitment to strengthen and support access to financing for the adoption of sustainable practices by companies that operate in sectors related to water ecosystems and the sustainable conservation of the oceans in Ecuador and the region. also contributing to the development of the capital markets and thematic bonds in Latin America and the Caribbean. IDB Invest will also continue to design and use innovative financing tools to leverage private sector investment and promote climate resilient development.
This deal is expected to contribute to three United Nations Sustainable Development Goals (SDGs): (i) Clean Water and Sanitation (SDG 6); (ii) Responsible Consumption and Production (SDG 12); and, (iii) Life Underwater (SDG 14).
About IDB Invest
IDB Invest, a member of the Inter-American Development Bank Group, is a multilateral development bank committed to promoting the economic development of its member countries in Latin America and the Caribbean through the private sector. IDB Invest finances sustainable companies and projects to achieve financial results and maximize economic, social, and environmental development in the region. With a portfolio of $16.33 billion in assets under management and 394 clients in 25 countries, IDB Invest provides innovative financial solutions and advisory services that meet the needs of its clients in a variety of industries.
About Banco Bolivariano
Born in 1980 with solid foundations, Banco Bolivariano currently maintains the best levels of asset quality, profitability and liquidity within the Ecuadorian financial system. Innovation is part of its evolution, offering products and services to its users to simplify processes and make them more practical, comfortable and agile. The lender is characterized by efficiency and trust, derived from proper management during its 43 years of life and the commitment of its team to project relationships with the future towards its internal and external audiences. For more information, visit www.bolivariano.com.