Latinex, the Latin American Stock Exchange, has announced plans for the first regional blue bond, to be floated before the end of the first quarter. The issue will be the first to embrace the Caribbean and Central America jointly and will originate in Panama, in a nod to the country’s marine preservation regulations.
“We have issuers that have some type of green, social, or sustainable transition,” says Olga Cantillo, executive president of Latinex. “We are close to having the first blue bond on the list, a first for the Central American and Caribbean region.”
Latinex aims to partner with a currently unnamed European company with expertise in structuring ocean financing projects.
Sovereign blue bonds can be used to support investments in biodiversity conservation, adaptation to climate change risks and blue economies aligned with Sustainable Development Goal 14. A 2021 Deloitte report states an annual investment of $175bn is required per year, $90bn of this to deal with marine pollution. They have also been spoken of as a mechanism to harness ocean energy.
World Bank President Ajay Banga told the annual meeting of the International Monetary Fund and World Bank in October that he wanted to make $1.25 trillion in subsidies for agriculture and fossil fuels more resilient and sustainable.
With a combined coastline of over 70,000 kilometers, Latin America and the Caribbean offer a considerable regional market for initiatives focused on coastal and oceanic sustainability. More regional transactions of sustainable bonds can be expected in the future, Cantillo predicts. Last November, the Inter-American Development Bank (IDB) pledged $150 billion to Latin America and the Caribbean to mobilize climate financing.
Latinex expects to follow its premiere blue bond with its first social bond. They are also in talks with Panama’s Ministry of Environment on establishing a Voluntary Carbon Market. Costa Rica launched Central America’s first in 2013 and was one of eight countries to receive a $350,000 grant from the World Bank to design and implement a carbon market. “It fills us with a lot of pride, because it is the result of the efforts we are working on,” says Cantillo. “Foreign investors have an appetite for these types of sustainable issues. We currently have more than $700 million [invested] in labelled securities.”
