Sustainable Finance Bank of the Year: BBVA
October 31, 2019
The banking innovator is helping to grow sustainable financing in Latin America with green bonds and loans
BBVA has assumed a leading role in promoting and introducing sustainable bank financing solutions throughout Latin America. It’s a commitment underscored by the size and scope of the deals it led over the past year.
In April 2018, BBVA led the very first green loan in Latin America, a $400 million debt facility for Iberdrola, the first green loan to be syndicated, according to Eddy Lacayo, BBVA’s head of corporate lending for Latin America.
A few months later BBVA led a $70 million sustainability-linked financing in Peru for Ferreycorp.
During the awards period, BBVA also helped place two green bonds in the Mexican local debt market.
The first was Bancomer’s 3.5 billion peso ($182 million) green bond in September.
Then in October 2018, it helped manage a green bond by Fondo Especial para Financiamientos Agropecuarios (FEFA).
Bancomer’s Mexican pesos issue was especially noteworthy. While 80% of green bonds are dollar- or euro-denominated, this local currency issue opened the market to local investors. Ángel Tejada, BBVA’s head of sustainable bonds, considers the deal a milestone.
Despite the growth in sustainable financing, obstacles remain. Securing green financing takes extra work. Lacayo points out that investors want to see that corporate borrowers are adhering to ESG (environment, social, governance) criteria.
As for the outlook for green bonds, Tejada says much will depend on sovereign borrowers to lend confidence and liquidity to the market.
He cites the positive impact of Chile’s inaugural $1.4 million issue in June.
Tejada says sovereigns will play a critical role in the market and expects Brazil and Mexico to have influential roles.