As climate change increasingly affects value chains, new financing strategies begin to emerge to develop sustainable investments. In the last decade, green bonds have become one of those options.
Precisely, this last Tuesday, the Guatemalan Corporación Multi Inversiones (CMI), which has sustainable energy operations in Costa Rica, completed the largest green bond placement carried out by a renewable energy company in Central America and the Caribbean.
The interest was such that the offers made were between four and five times higher than the original issue. This represented a collection of $700 million, highlighted the Executive Director of the CMI Capital division, Enrique Crespo.
Another interesting piece of information is that 85.4% of the investors are American and European.
In Costa Rica
This company, present in 15 countries, currently has three wind generation plants in Costa Rica. However, only two of them are operating because the agreement with the Costa Rican Electricity Institute (ICE) for the third plant expired recently.
This is the SRL Wind Power Plant, located in Tilarán, as confirmed by the company. The firm added that they are doing everything possible to get it back in operation. The plant, also known as PESA, has 20- megawatt production capacity.
As a result, CMI currently has the capacity to generate 130 megawatts. The Orosí plant produces 50 megawatts, while the other 80 come from the Alisios plant, in Quebrada Grande in Liberia, Guanacaste.
This energy company has also ventured into the food sector. In fact, this division is also present in the country.
Green bonds are a financial instrument whose revenues are used exclusively to finance sustainable projects, for example, the construction of a new wind or solar plant, explains the International Capital Markets Association (ICMA).
This organization developed the Green Bond Principles that the European Union (EU) in turn used recently to develop a standard for this instrument.
Precisely, in 2007, the European Investment Bank - the EU's community financial body - issued the first of these. A year later, the World Bank did the same.
Since then, the tool has been adopted by other governments and private companies, such as CMI.
These must go through a process similar to regular bonds, so they also receive a rating from risk rating agencies. In the case of the regional company, the ratings were as follows:
- Moody’s: Ba3
- S&P: BB-
- Fitch: BB-
The bonds will earn interest of 6.250% and will mature in 2029. In addition, a syndicated loan for $ 300 million has been secured, the company added.
“The placement of green bonds involves the issuer's commitment to make sustainable investments. In this sense, the action is aligned with the objectives of contributing to the reduction of Greenhouse Gas emissions and to decarbonization and diversification of the regional energy network in the countries where the company operates.
"In this way, CMI Energy bolsters its investments in the region, under a sound vision of a sustainable future", Crespo highlighted.
The four eligible categories covered in the framework of the green bonds are:
- Renewable energy: Renewable energy and Climate Action
- Energy efficiency: Renewable energy and Climate Action
- Green buildings: Innovation and infrastructure, and Cities and sustainable communities.
- Clean transportation: Sustainable cities and communities.
All its operations in Central America added together, the company has the capacity to generate 811 megawatts. In total, it has eight plants distributed in Costa Rica, El Salvador, Guatemala and Nicaragua.
- Wind: 324 megawatts
- Hydroelectric: 317 megawatts
- Solar: 170 megawatts
In the country, green bonds are beginning to make inroads. As reported by the Forbes Central America webpage, as of 2020, Costa Rica was the sixth largest issuer of green bonds in Latin America.
Source: Observador CR