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Can rollup of Mexican energy-efficiency projects jumpstart green bonds in Latin America?



Climate Finance

One region is lagging the global green bond boom: Latin America.

Following a $204 million bond for a Peruvian wind farmer in 2014, there have been only six green-bond issues in the region, according to Latin Finance. Weak creditworthiness and small projects have discouraged commercial investors and hindered the market.

To combat “a market failure on financing energy efficiency” the Inter-American Investment Corporation, or IIC, is experimenting with a securitization program in Mexico it hopes to roll out in other Latin American countries. The IIC will pool energy-efficiency projects and issue its own green bond to finance the lot.

Separately, a $2 billion green bond was issued in September to finance Mexico City’s new international airport, which will be powered by clean energy and incorporate a water reuse system. Together, Latin Finance reports, the two initiatives may “herald a busier future for green bond deals in Mexico and beyond.”

This post originally appeared in ImpactAlpha’s daily newsletter. Get The Brief.

Photo credit: foxbat/Shutterstock.com

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