The operations in green bonds of the Brazilian Development Bank (BNDES) were recognized as one of Latin America’s top three in 2017 by an international award granted by Global Capital, from the Euromoney Group. The choices – which include the also Brazilian Fibria, and the Chilean CMPC – were made through voting with experts, professionals and market investors, which gives the work credibility.
“For the first time the structuring of an international fundraising market, based on renewable energy projects, was a result of the collective performance of five BNDES areas: Energy, Legal, Controllership, Financial and International, and Public and Socio-environmental Administration,” assesses Selmo Aronovich the financial superintendent,. “This award is another international certification of the importance given by BNDES to socio-environmental sustainability. It's important the world should know we have tradition and expertise in supporting sustainable projects,” adds André Carvalhal, the head of the Department of Market Fundraising.
In early May, BNDES concluded raising US$ 1 billion in green bonds in foreign markets. “We raised US$ 1 billion, but there was a demand for US$ 5 billion in orders, with the participation of more than 370 investors in the process of pricing the bonds, which expire in 2024,” says Carvalhal. The last foreign issue of the Bank had been in 2014. The papers present features that are similar to the conventional bonds, but the obtained resources will finance environmentally sustainable projects – on wind or solar power generation; new or already existing in the Bank’s portfolio –, tested by a verifying company that has expertise in the area.
The operation, which was coordinated by Bank of America Merrill Lynch, Crédit Agricole, and JP Morgan, resulted in a rate of return to the investor of 4.80% per annum. This value represents a prize of 269.3 basis points on the rates of the bonds from the Treasury of the United States of America and about 60 basis points on the foreign bonds from the Federative Republic of Brazil. It was also possible to spread the bonds, which are listed in the Luxembourg Green Exchange, among purchasers of different investment profiles and distinct geographic regions (United States of America, Europe, Asia and Latin America), diversifying the BNDES investors base by accessing a range of institutions that are focused on “green finance.”
Sustainable development – The release of this bond adds to the several BNDES initiatives to fulfill its role as an inducer of sustainable development. Between 2003 and 2016, in the sector of wind power alone, the Bank approved 87 credit operations, a total amount of R$ 28.5 billion; thus providing an increase in the installed capacity of around 10.7 GW.
In addition to the consolidation of the BNDES international presence, the success of the offer of green bonds leads to a number of benefits. Among them, is the reinforcement to the socio-environmental sustainability in the Bank priorities; the promotion of better socio-environmental management practices; the incentive to the access of other Brazilian issuers to the market of green bonds; and the construction of a new reference point in its term structure on the international interest rate.