CABEI issues first global Social Bond in the International Capital Markets
The issuance will boost the region's access to essential services, affordable basic infrastructure, socio-economic empowerment, sustainable agriculture, food security and climate change.
Tegucigalpa, February 4th, 2021.-Through this newly achieved milestone, Central American Bank for Economic Integration (CABEI) not only becomes the first ever financial institution in the Central American region to issue a global Social Bond, but also strengthens and solidifies its position as an SSA issuer in the US Benchmark market. These notes were issued at a 5-year tenor under a 144A/Reg S transaction format, for a total amount of US$500 million with a 1.14% coupon, as a result of the Bank’s renewed funding strategy under which it looks to become a frequent issuer in the SSA market.
The proceeds of this transaction and their timing are efficiently aligned with CABEI’s recently approved Social Bond Framework which intends to deepen the bank’s commitment to combat social disparity and contribute to the socioeconomic development of the Central American region. CABEI’s Social Bond Framework was developed in accordance with the International Capital Markets Association’s (ICMA) Social Bond Principles and as such, it achieved a favorable Second Party-Opinion by Sustainalytics.
CABEI’s Executive President, Dr. Mossi, stated that “issuing social bonds in the international capital markets demonstrates the Bank’s strong commitment towards the social development of the Central American region, as part of its mission and strategy. It is unquestionable that over the past year, the pandemic has sparked a significant rise in this type of bond issuances. As such, CABEI has started 2021 with the objective of developing an investor base in the thematic bond market, which requires a portfolio of projects that the bank has developed to guarantee the region’s access to essential services, affordable basic infrastructure, socio-economic empowerment, and sustainable agriculture; while also enhancing food security and climate change resilience, in alignment with the 2015-2030 United Nations Sustainable Development Goals.”
Consequently, Dr. Mossi added that “social bonds have become a very useful and timely instrument amidst the current extraordinary circumstances we are facing, and in particular, for enhancing CABEI’s support to its member countries in their corresponding recovery efforts. I have no doubts that similar transactions in other markets will surely follow”.
CABEI’s social bond was subject to a solid demand of approximately US$1.2 billion, which accounts to 2.4 times the amount issued, with a strong geographic diversification; as investors from Europe, Asia, United States/Canada, Latin America and the Middle East participated in the transaction. The issuance also encompassed specialized ESG accounts, central banks, supranational institutions, investment funds, commercial banks and insurance companies.
Currently, CABEI’s credit ratings in an international scale are: Standard & Poor’s with a rating of AA (stable outlook), Moody’s with Aa3 (stable outlook) and Japan Credit Rating (JCR) with AA (stable outlook), reaffirming the Bank’s financial strength.