For IFR, the introduction of the symmetry in rate adjustment —step-up/step-down— within the bond market linked to sustainability “is a great advance”, unlike the loan market linked to sustainability, where there is bidirectional rate setting —since 2017—. Since the issuance of the first SLB in 2019, “bond investors had been reluctant”, until then, “to accept any financial structure that reduced the coupon based on performance”.
In addition, the determination of the country was highlighted because its “financially binding commitments that are aligned with the Paris Agreement on climate change,” where the government made it clear that “without the two-way fee-setting structure, they would not be interested in moving forward,” according to Adam BothamleyGlobal Co-Head of Bank Debt Capital Markets HSBC.
Some 40 global accounts invested in Uruguayan bonds for the first time
According to the magazine, the choice to issue in 2022 was a challenge, “but the transaction attracted significant demand with a book of $3.96 billion orders from 188 global accountsincluding 40 accounts that invested in Uruguayan bonds for the first time”. A country that had to demonstrate that its key performance indicator targets “were really ambitious”.
On this, they indicated that “Uruguay will only agree to pay less interest if it reduces emissions by a 52% and increases its forest area by more than 3% for 2025”. An innovation that “sends a signal to issuers that potentially less expensive financing is available in exchange for achieving sustainability strategies.”
Source: Ambito
