LIMA, PERU, MAY 7, 2024 – COFIDE, the Development Bank of Peru, has reached a significant landmark in its history by issuing its inaugural thematic bond on the international market. Supported by the Global Green Growth Institute (GGGI) and bolstered by the market’s confidence in COFIDE’s dedication to sustainable development, the issuance successfully raised US$300 million.
These funds are earmarked for financing high-impact initiatives that promote sustainable growth across Peru, including offering credit to micro, small, and medium enterprises (MSMEs) that are particularly vulnerable to climate change. The issuance witnessed a remarkable demand, nearly USD 1.3 billion—over four times the initial offer—allowing for a spread adjustment of 40 basis points. This adjustment set a new record for COFIDE, positioning the bond at 65 basis points over the Government of Peru’s comparable bonds, the lowest in COFIDE’s history.
The partnership between GGGI and COFIDE is funded by the government of the Grand Duchy of Luxembourg through the Global Trust Fund on Sustainable Finance Instruments (GTF). Created in 2023, this program aims to bridge the gap in sustainable financing by mobilizing resources through the capital markets in developing countries to fund low-carbon investments and projects that support vulnerable populations. With an estimated global capitalization of USD 129.3 trillion, the bond market represents the main source of capital for sovereign governments and public and private financial institutions. Shifting only 2.8% of global issuances towards development financing gaps of developing countries would be sufficient to fill the NDC and SDG USD 3.7 trillion gap.
Jorge Velarde, President of the Board of Directors at COFIDE, commented, “We are very pleased with this excellent outcome, reflecting the efforts of the COFIDE team, including roadshows conducted in Europe and the United States. The demand evidenced by this bond reflects the confidence in the Peruvian market and our capacity to drive sustainable development, particularly in the sector of MSMEs with social impact.”
GGGI through the GTF provided technical and strategic support to COFIDE, assisting in the development of the Thematic Bond Framework and supporting the Second Party Opinion review by S&P Global Ratings. This support also included organizing roadshows for investors in major financial centers such as London and Luxembourg, culminating in an event at the Luxembourg Stock Exchange (LuxSE).
“Luxembourg, represented by the Ministry of Foreign Affairs, the Ministry of the Environment, Climate and Biodiversity and the Ministry of Finance on the GTF Board, is proud of the first issuance of a bond through the Global Trust Fund on Sustainable Finance Instruments,” highlighted the GFT Board, adding that “The issuance of the USD 300 million social bond by COFIDE, displayed on the Luxembourg Green Exchange, marks a significant milestone for the GTF Program and showcases the power of collaboration and innovation in sustainable finance. The overwhelming demand underscores the imperative for thematic bonds in developing and emerging markets. The GTF Board is pleased to have played a role in facilitating this landmark transaction, advancing our collective mission for social and environmental impact.”
The CEO of LuxSE, Julie Becker, joined the celebration of this significant achievement, stating, “We are delighted to welcome COFIDE to the Luxembourg Green Exchange with the display of its USD 300 million social bond, and to have facilitated the bank’s non-deal roadshow for its Social Bond Framework in Luxembourg in March. As the leading exchange for the listing of international debt securities, with a deep focus on sustainable finance, we see it as our duty to mobilise capital flows towards the countries that need it the most and support issuers such as COFIDE by providing them with the platform and tools needed to diversify their investor base.”
Following the announcement, Dr. Frank Rijsberman, Director-General of GGGI, highlighted the broader implications of their collaboration: “This launch marks a significant milestone in the partnership between COFIDE and GGGI and demonstrates the effectiveness of our strategic collaboration, which has enabled COFIDE to return to the international market after four years.” He further added, “We are also proud to have worked with COFIDE on this first issuance under our GTF Program, which we will continue implementing across the emerging markets of Latin America and Caribbean, Africa and Asia to support the Governments and other market players in these countries in promoting sustainable investments and projects that address the environmental and social challenges of the region, demonstrating our commitment to responsible financial solutions aligned with global development goals.”
Following the announcement, Dr. Frank Rijsberman, Director-General of GGGI, highlighted the broader implications of their collaboration: “This launch marks a significant milestone in the partnership between COFIDE and GGGI and demonstrates the effectiveness of our strategic collaboration, which has enabled COFIDE to return to the international market after four years.” He further added, “We are also proud to have worked with COFIDE on this first issuance under our GTF Program, which we will continue implementing across the emerging markets of Latin America and Caribbean, Africa and Asia to support the Governments and other market players in these countries in promoting sustainable investments and projects that address the environmental and social challenges of the region, demonstrating our commitment to responsible financial solutions aligned with global development goals.”