IDB Invest subscribed the first sustainable bond with incentives linked to objectives issued by Banco Promerica S.A., to support green and social projects in Guatemala. IDB Invest participated with a total amount of $30 million and mobilized up to $20 million from LAGreen. Banco Promerica is the first financial institution to issue a bond of its kind in the country.
This issuance is part of a program where Promerica received approval from the Monetary Board of Guatemala for an issuance program worth up to $500 million to issue green, social or sustainable bonds. IDB Invest participated the program’s Series 1 as an anchor investor, and in the Series 2 could participate, in a non-committed manner, subscribing bonds for a total of up to $15 million, where the participation of other investors is expected.
Guatemala is one of the world’s most vulnerable countries to the effects of climate change. Globally, it ranks fifth among the countries with the greatest exposure to economic risk in the face of climate disasters.
“The banking sector is in a key position to significantly influence the conservation and protection of the environment by directing the flow of capital toward greener projects and companies”, says Marisela Alvarenga, Managing Director and Head of Division of Financial Institutions at IDB Invest.
Additionally, the resources mobilized from LAGreen are geared toward financing credits for micro, small and medium enterprises (MSMEs), MSMEs owned by women and credits for the institution’s green project portfolio. MSMEs are key to the Guatemalan economy, contributing to 80% of employment. Yet, it is estimated that only 12% of these have access to financing.
“We are very excited about this collaboration with IDB Invest, which allows us to drive our mission to promote inclusive growth and environmental sustainability in Guatemala. This investment on the ground reinforces our commitment to sustainable finance, which also positions us as leaders in the Sustainable Banking Bonus market,” commented Ing. Edgar Bran, General Manager of Banco Promerica Guatemala.
Additionally, the Series 1 will have a blended financing component from the Women Entrepreneurs Finance Initiative (We-Fi), in the form of incentives of up to $165,000, subject to the achievement of annual targets with the objective of increasing the number of clients in the portfolio of small and medium-sized women-owned companies.
Together with We-Fi, IDB Invest is also supporting Promerica through advisory services for the development of a taxonomy and segmentation of the social and gender portfolio, a social conceptual framework, and an opinion of second parties in compliance with the requirements of ICMA. It will also provide assistance for a strategy supporting the growth goals of the women SME portfolio to adopt financial solutions for SME and women SME, a segment with less access to financing.
The deal with Banco Promerica contributes to the following Sustainable Development Objectives (SDGs) of the United Nations: SDG 1 (No Poverty), SDG 5 (Gender Equality), SDG 7 (Affordable and Clean Energy), SDG 8 (Decent Work and Economic Growth), SDG 9 (Industry, Innovation and Infrastructure), SDG 10 (Reduced Inequalities), SDG 11 (Sustainable Cities and Communities), SDG 12 (Sustainable Consumption and Production), SDG 13 (Climate Anchor) and SDG 15 (Life on Land).
About IDB Invest
IDB Invest, a member of the Inter-American Development Bank Group, is a multilateral development bank committed to promoting the economic development of its member countries in Latin America and the Caribbean through the private sector. IDB Invest finances sustainable companies and projects to achieve financial results and maximize economic, social, and environmental development in the region. With a portfolio of $21 billion in assets under management and 394 clients in 25 countries, IDB Invest provides innovative financial solutions and advisory services that meet the needs of its clients in a variety of industries.
About Banco Promerica Guatemala
At Grupo Promerica, we believe that all people and companies in our communities must overcome their limits to achieve the success they deserve. For more than 30 years we have promoted a bank that develops relationships and offers products and services in new countries: Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica, Panama, Dominican Republic, Ecuador and Gran Caimán. We focus on maintaining permanent empathy in the communities we serve, developing long-lasting relationships based on mutual trust. Our entrepreneurial spirit leads us to understand and identify ourselves in each country where we are, thus developing a common culture.
About LAGreen
LAGreen Fund is the first impact investment fund dedicated to promoting the issuance of green bonds in Latin America. The fund has the objective of supporting the benefits for the climate, the environment and society through the promotion of the green bond market in Latin America. With the purpose of consolidating green bonds as instruments to mobilize resources, there are more sustainable and green economic models in the region. The German Development Bank (KFW) created LAGreen Fund, with initial capital contributed by the European Union and the German Federal Ministry of Economic Cooperation and Development (BMZ) and Finance in Motion as investment advisor. The fund seeks to support the issuance of high-impact thematic bonds in the region, attract a greater volume of long-term financing for sustainable projects, as well as support emitters through technical assistance during the different phases of preparation, issuance and post-issuance of bonuses, and through commitments to purchase a significant part of the issue.
About We-Fi
The Women Entrepreneurs Financing Initiative (We-Fi) aims to unlock financing for women-owned companies (PYME Mujer) in developing countries. We-Fi partners include 14 donating governments, six multilateral development banks as implementing partners and many other stakeholders from the public and private sector around the world.