From the massive wind farms of Patagonia to government-backed social-betterment programs of Mexico and Chile, businesses and institutions across Latin America are increasingly adopting new, long-term sustainability practices and policies, driving demand for innovative financing in the process. It is familiar territory for BNP Paribas, which has long been at the forefront of Latam’s sustainable finance market, coordinating sustainability-linked loans and credit facilities while also offering a full slate of sustainable bonds, including green and social, and related solutions. This heightened emphasis on ESG-based financing in Latam and elsewhere helped make BNP Paribas the top provider of ESG loans during 2020, according to Refinitiv LPC data.
Supporting Latam’s move to cleaner and smarter energy with renewables and efficiency gains
One of the world’s foremost proponents of renewable energy, Argentina is on track to achieve 20 percent non-carbon electric production by 2025, and, through its RenovAr platform, actively promotes foreign investment in domestic renewable projects. Earlier this year, BNP Paribas served as Mandated Lead Arranger and Export Credit Agency covered lender for YPF Luz, the power generation division of Argentina’s state-backed oil company, extending $100 million in secured credit for the construction of Cañadón León, a 122-megawatt wind farm in Santa Cruz province. The initiative is part of YPF Luz’s goal to supply 400 megawatts of wind energy for larger private customers during the current year.
In Chile, BNP Paribas has helped the country issue two green bonds, starting with Latin America’s first sovereign Green Bond in June 2019 (and a subsequent issue in January 2020). Since then, the number of strategies supporting sustainable causes in Chile has continued to grow. Last August, BNP Paribas was tapped to be joint lead arranger and swap provider for a $130 million, 10-year amortizing Senior Secured Green Loan. Spearheaded by global investment management firm, AMP Capital, and innovative solutions provider Enel X Chile, the loan will allow Chile’s capital of Santiago to replace diesel-powered city buses with new electric models, part of the country’s effort to achieve non-carbon public transportation over the next 20 years. In another first, BNP Paribas completed its inaugural Latam-based Sustainability-linked Loan (SLL) for Chilean pulp and paper manufacturer CMPC, including key performance indicators (KPIs) covering greenhouse gas emissions and other environmental targets.
Leading to support Latam across environmental and social factors
Other firms have secured SLLs as a way to fast-track the integration of sustainability strategies. Among BNP Paribas’ most notable achievements in 2020 was serving as Mandated Lead Arranger/Sole Sustainability Coordinator for Mexico’s global cement company CEMEX, which earmarked its $3.2 billion SLL (the largest in the emerging markets to date) to help achieve net-zero CO2 compliance by 2050. Like CMPC, CEMEX’s SLL is connected to KPIs that are specifically focused on 2030 CO2 emissions-reduction targets; including a 35 percent reduction in CO2 per ton of cementitious product.
Building a more resilient and equitable society is at the heart of BNP Paribas’ sustainability focus. In September the bank assisted the Mexican government in the creation of the world’s first sovereign Sustainable Development Goals (SDG) Bond. The bank has also led the way in COVID-19-related sustainable/social bond issuance, including the first COVID-19 Response Bond in Latin America from Corporación Andina de Fomento (CAF). Launched in May, the €700 million, five-year social bond supported pandemic relief and recovery programs throughout the region.
As demand for sustainable finance expands throughout the Latam region, BNP Paribas has emerged as the leading facilitator of sustainability-related deals covering both corporations and institutions. Backed by a solid balance sheet with strong capital and liquidity ratios, BNP Paribas remains uniquely positioned to help Latam businesses as they strive to achieve a more efficient and carbon-free (lower carbon) operational footprint across an even broader range of global industries.
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