Second issuance of Brazilian green bonds yields $2 bi
Brazil's second issuance of sustainable public bonds on the international market, held on Thursday (Jun. 20), raised $2 billion, according to the country’s National Treasury. This figure aligns with the agency's most recent estimates.
These securities are called green bonds because they are linked to environmental commitments. Rather than just earning financial interest, foreign investors receive income from sustainable projects. These bonds will pay an annual rate of return (interest) of 6.375 percent. In the first issuance, held in November last year, investors requested rates of 6.5 percent per year.
The spread, which is the difference between the rate on Brazilian securities and US Treasury bonds, considered the safest in the world, stood at 212.8 basis points. This means Brazilian securities offered a rate 2.128 percentage points higher than US Treasury bonds.
Both the interest rate and the spread serve as measures of investor confidence in Brazil. A lower spread indicates higher confidence in Brazilian bonds among international investors. In the first issuance, the spread stood at 1.819 percentage points.
Demand exceeded supply, with requests totaling $4.7 billion, according to the National Treasury. There was significant participation from foreign investors, with 77 percent of buyers from Europe and North America. Latin America, including Brazil, accounted for 14 percent of the purchases.
Sustainable investment
Green bonds are a key component of the Ecological Transformation Plan, announced by Brazil at the 28th United Nations Conference on Climate Change (COP28) in Dubai in December last year. Part of the proceeds raised from these bonds will go to the National Climate Change Fund, which was relaunched in August 2023.
In May, the National Treasury announced that the proceeds from the second issuance on the foreign market would primarily finance sanitation and circular economy projects. In the first issuance, in November, priority had been given to clean transportation projects (20% to 25%) and renewable energy projects (15% to 20%).
