Bancóldex Issues $100 Million USD in Bonds to Finance Projects with Social Benefits in Colombia
Colombian development bank Bancóldex has issued bonds with a value of around $100 million USD (300 billion pesos) with the aim of financing small business projects that will help benefit the country’s rural, vulnerable, and conflict-affected population.
The market demand of 1.2 billion pesos in bids was four times greater than the issuance level. Even before this figure was known, María Lorena Gutiérrez, Colombia’s minister of commerce, industry, and, tourism, said last week that the issuance could be later be extended by another $35 million USD.
Gutiérrez added that the ministry expects these bonds to help promote employment in areas of need and finance basic infrastructure — including drinking water, sewers and transportation — as well as health, education, and housing projects.
Bancóldex President Mario Suárez Melo highlighted the benefits the bonds will have for small business. “As a development bank for business growth, part of our purpose is to channel capital for micro and small entrepreneurs to formalize and access loans under favorable conditions that allow them to grow their businesses,” said Suárez.
The Bogotá-based development bank’s president added that the funds will support projects in line with Colombia’s effort to make progress in reaching the UN Sustainable Development Goals. Specifically, he said this will support “projects related to employment generation and formalization, inequality reduction, support to rural economies, access to credit, men/women wage gap reduction, and integration of excluded sectors into the productive economy.”
The bonds, which have terms of three and five years, were issued through the Colombian stock exchange, Bolsa de Valores de Colombia (BVC).
Bancóldex issued the bond with technical support from the Inter-American Development Bank (IDB) through a technical assistance program financed by Switzerland’s State Secretariat for Economic Affairs (SECO) in coordination with the Swiss embassy in Colombia.
The bond structure was reviewed by Sustainalytics, a Dutch firm that rates the sustainability of listed companies based on their environmental, social, and corporate governance performance.
“There is a huge opportunity for the private sector and individual investors to participate in a country’s development,” said Rafael de la Cruz, Andean region manager for the Inter-American Development Bank. “This type of instruments helps democratize participation in the financing of issues that are crucial for the development agenda, and at the same time boosts public investment transparency.”
READ MORE: Bancóldex Will Not Finance Public Transport Vehicles that Operate on Diesel
This marks the second time Bancóldex has made a large bond issuance that includes social goals in the past year. Last August, the bank issued some 200 billion pesos (nearly $70 million USD) in green bonds intended to finance projects that can help deal with the effects climate change. This issuance was also supported by IDB and SECO.
Along similar lines, Bancóldex also recently announced that it would no longer finance public transportation vehicles that run on diesel in an attempt to combat the country’s issues with air quality and pollution. Suárez categorized the decision as “a reaffirmation of a policy in line with improving quality of life of our population.”