Colombia issues its first social bond in the local market for 400,000 million pesos with IDB support

(This new version corrects the total amount of bonds sold in the local market.)

FUNDS WILL FINANCE PROJECTS THAT BENEFIT MICRO AND SMALL ENTERPRISES IN VULNERABLE SOCIAL SECTORS SUCH AS WOMEN, ARMED CONFLICT VICTIMS AND RURAL BUSINESS OWNERS

BOGOTA, Colombia – Bancóldex, Colombia’s corporate development bank, today issued the country’s first social bond in the local market for 400,000 million pesos. The bond was issued with technical support from the Inter-American Development Bank through a technical assistance program financed by Switzerland’s Embassy in Colombia – State Secretariat for Economic Affairs (SECO).

The tender has exceeded expectations, with 1.2 billion pesos in bids, 4.17 times more than the amount tendered. The funds will be used to finance “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,” said Bancóldex President Mario Suárez Melo.

“It is imperative that the public sector actively seek to leverage private sector resources to finance our region’s sustainable development,” said Juan Ketterer, Chief of the IDB’s Connectivity, Markets and Finance Division. “At the IDB we are committed to support countries’ efforts to develop innovative financial instruments, such as social bonds, to strengthen local capital markets to help garner resources to finance sustainable development projects in a regular fashion.”

Rafael de la Cruz, the IDB’s Colombia representative and Andean Region manager, said: “There is a huge opportunity for the private sector and individual investors to participate in a country’s development. 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.”

The bonds have 3 and 5 years terms and, for the first time, were issued in the domestic market through Colombia’s Stock Exchange. They were offered to physical persons, corporations, pension and severance funds, insurance, fiduciary and financial institutions, government organizations, multilateral agencies, and the public in general through Alianza Valores, Corredores Davivienda, Ultraserfinco, and Valores Bancolombia placement agents.

This social bond will also contribute to increase investment transparency. Its structuring was supervised and received positive reviews by Sustainalytics, an independent, global institution and a leader in social governance, environmental and corporate evaluations.

Bancóldex will provide annual reports to investors on the use and impact of the social bonds, as well as on the benefited sectors. Results will be monitored by an independent certifier.

This is the second time in under a year that Bancóldex innovates in the domestic market with IDB and SECO support. In August 2017 it launched its first green bond in the local market, a 200-billion peso emission to finance projects aimed at alleviating the impacts of climate change. These social bonds are the first instruments tailored to finance Colombia’s Sustainable Development Goals – in particular, SDG 5 (gender equality), SDG 8 (decent work and economic growth), SDG 9 (industry, innovation and infrastructure), and SDG 10 (reduced inequalities).