IDB Invest Issues Social Bond to Support MSME Value Chains in Latin America and the Caribbean
This is IDB Invest’s second issuance in Mexico under its Sustainable Debt Framework, consolidating the institution's commitment to development and support for MSMEs in the region.
IDB Invest issued a three-year social bond in Mexico worth 2.5 billion Mexican pesos (equivalent to approximately US$125 million). This is IDB Invest's second sustainable issuance in Mexico, following a gender bond issued in March 2021. The social bond was listed on the Mexican Institutional Stock Exchange (BIVA) and matches the size of IDB Invest’s largest bond issuance in Mexico to date, reflecting IDB Invest's commitment as a leading sustainable issuer in Latin America and the Caribbean.
The funds raised will finance projects aimed at improving financing conditions for micro, small and medium-sized enterprises (MSMEs) in value chains in Latin America and the Caribbean, supporting the creation of jobs and helping to create ecosystems that strengthen MSMEs by increasing their competitiveness and sustainability. The sector is essential for the economic growth of the countries in the region, contributing to 90% of jobs and 40% of regional GDP.
The issue received local ratings of mxAAA by S&P Global Ratings and AAA.mx by Moody's and AAA(mex) by Fitch Ratings, respectively. Scotiabank and Santander acted as placement agents in the operation. The transaction was 1.2 times oversubscribed, with more than MXN$ 3.070 million orders in Mexican pesos. After having started trading with an indicative rate of between 9 and 5 basis points above TIIE 28, the strong demand allowed the placement agents to set the rate at the lowest point of the indicative range, at 5 basis points above TIIE 28. Investment funds accumulated 52% of the bonds issued, 28% pension funds (Afores) and the remaining 20% banks and brokerage houses.
The successful result reflects the great interest of investors in Mexico for sustainable bonds and is a recognition of IDB Invest's commitment to fostering the establishment and growth of MSMEs in Latin America and the Caribbean.
In 2021, all bonds issued by IDB Invest were green, social and sustainable bonds. Earlier that year, the institution issued its first $1 billion global benchmark sustainability bond.
“This social bond represents a decisive commitment to expand access to markets and financing for Mexican MSMEs within value chains, and will help create jobs and strengthen their resilience, competitiveness and sustainability, essential for the country’s continued economic growth,” said Ernesto Stein, IDB Group Representative in Mexico.
Orlando Ferreira, Chief Finance Officer at IDB Invest, said: "We are very satisfied and grateful for the success of this important issue and for the excellent reception it has received from Mexican investors, who have shown great interest in supporting IDB Invest in its MSME value chain strategy.”
About IDB Invest
IDB Invest, a member of the IDB 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 $14.1 billion in asset management and 327 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.