Brazil, Chile set to lead LatAm green bond market

Brazil and Chile are set to be Latin America’s green bond leaders in the coming years, according to an expert.

"Chile has been standing out for a few years now as one of the regional leaders in the issuance of green bonds as the national government plays a key role, issuing this kind of bonds itself. In Brazil, the volume of green bond issues is already large due to the huge size of its debt market, which is the largest in the region," Leisa Cardoso de Souza, head for Latin America at the Climate Bonds Initiative (CBI), told BNamericas. 

In 2021, the volume of green bonds sold worldwide totaled US$517bn, the highest since the debut of the asset class and marking the 10th consecutive year of green market expansion.

"We do not have the updated data yet on issues from Latin America for the full year of 2021, but in general historic terms the region represents around 3% of the volume of total issues in the world," said Souza. 

Latin America’s green bond sales amounted to US$30.2bn in the 12 months through June 2021, the most recent figure available from CBI. Of the total, US$10.3bn came from Brazil, US$9.5bn was issued in Chile, and US$4bn came from Mexico. 

According to Souza, the Chilean government is promoting sovereign green bonds to generate interest among private firms in issuing green debt. 

In Brazil, the largest volume of issues has come from companies in the infrastructure and agriculture sectors. 

Along with a growing appeal among global investors, banks are increasingly getting involved in helping companies to sell green bonds.

"Banks are also developing more sophisticated techniques to assess which companies and projects are eligible to issue green bonds," said Souza. 

CBI is a non-profit organization focused on mobilizing bond markets in order to promote investment in projects and assets that are necessary to transition to a low-carbon economy. Among its funders are Switzerland’s State Secretariat for Economic Affairs, Bank of America and the Rockefeller Foundation. Among its current partners are Deutsche Bank, Nasdaq, BlackRock, S&P Global, HSBC and Barclays.