Banco ABC issues social bonds in Brazil

Banco ABC issues social bonds in Brazil

Corporate & Sovereign Strategy Economy & Policy Capital Markets Bonds Coronavirus Brazil Latin America

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Banco ABC Brasil, a branch of the Bahrain-based lender Bank ABC, said Wednesday the it issued the first social bonds in Brazil to support loans to small and medium-sized enterprises (SMEs) and healthcare companies during the COVID-19 pandemic.

IDB Invest, part of the Inter-American Development Bank, structured the deal and acquired the BRL525 million ($100 million) in five-year notes, the multilateral lender said in a separate statement.

The bonds, the first of their kind issued by a financial institution in Brazil, "could trigger a new trend in the domestic capital markets, particularly for the financial sector," IDB Invest said.

Banco ABC said the bonds are part of the bank's strategy to increase its middle market portfolio by BRL30 million to BRL250 million per year and provide more loans to healthcare companies.

UK-based solar developer Faro Energy issued Brazil’s first so-called sustainable bonds with a 10-year tenor in January and began structuring BRL150 million in 2030 notes in February.

IDB Invest acquired COP363 billion ($98.4 million) in seven year, gender-linked social bonds from Colombian bank Davivienda in August and COP52 billion in social bonds from Colombian mortgage lender La Hipotecaria in June.