Growing green bonds in Mexico

Green bonds are increasingly issued for raising capital to fund renewable energy projects, and Mexico is no exception as investors look to deepen their ESG portfolios through green securities. Back in 2015, Mexico’s NAFI raised the country's first ever green bond, a $500 million issue with a 3.38% coupon to finance Mexican renewable energy projects. And, since then, Mexico has been at the forefront of green bond growth across LatAm countries, with the New International Airport for Mexico City (NAICM) most recently issuing a $2 billion cross-border green bond in September 2017, which received orders for $4 billion – the largest-ever order for a Latin American green bond. 

Ahead of TXF LatAm 2018, TXF spoke with Alba Aguilar Priego, Director of New Markets, SIF ICAP, Mexican Stock Exchange (BMV), to find out more about the BMV's Mexico Green Bonds Investor Statement and how the initiative is greening the energy economy in Mexico.

TXF: Mexican Stock Exchange (BMV) launched the Mexico Green Bonds Investor Statement backed by 57 institutional investors last year; how has the initiative progressed since launch?

Alba Aguilar Priego (AAP): Afore Sura, the third pension fund in Mexico, announced its decarbonisation strategy to be implemented for the following years.

TXF: Nafin launched the first green bond in Mexico at US$500m to fund 9 wind farms; how has the issuer and investor base expanded since that first issuance?

AAP: Yes, Nafin have issued two more, one green and one social listed on BMV, we have a green bond from Mexico City and 4 sustainable bonds from Rotoplas (1), Banobras (2) and Ciudad de Mexico(1).

TXF: How will BMV enable green bond listings from corporate entities in 2018/19?

AAP:  The BMV will continue disseminating the benefits of green bond issuances and will offer finance education for listed companies and institutional investor related with ESG related data, disclosure and risk analysis.

TXF: What green bond issuance volumes are we likely to see in Mexico next year and who are the likely issuers?

AAP: We see potential issuances related with renewable energy, low carbon building, land use and sustainable agriculture and also on water management, all of them probably in debt or hybrid formats (like CKDs o FIBRAs)

AAP: How have green bonds performed in the debt securities index to date in Mexico?

AAP: In Mexico, we still don´t have an index for green debt securities, but in the secondary market, the green bonds have a good performance.

TXF: How is BMV promoting both primary and secondary markets of energy/utilities companies in Mexico?

AAP: The primary market for energy/utilities is comprised of Ministry of Energy, under management of two public organism: SENACE and CRE.

TXF: Many renewable developers are privately held – do you see IPO opportunities in the market?

AAP: Yes, probably under special purpose vehicles like CKDs, CERPIs or FIBRAs.

TXF: Mexico has recently elected a new government; how has the bond market performed since the election?

AAP: The smooth transition hasn't had negative effects on the market, just some episodes of volatility in the exchange rate and interest rate, mainly due to international market movements.

TXF: How else is the BMV contributing to building a sustainable, low carbon, economy in Mexico?

AAP: Through the Green Finance Advisory Council with the support of its members, like Financial Associations, Institutional Investors, Commercial and Development Banks, Credit Agencies, Consultants and the Ministry of Environment among others.

Hear more about greening the energy economy, future energy projects and opportunities in the region at our forthcoming TXF LatAm 2018 conference taking place on the 24th of October in Mexico City, Mexico. For any further information contact us at: marketing@txfmedia.com or call 0203 735 5180