EconomyA new instrument arrives at the BMV: the bond...

A new instrument arrives at the BMV: the bond linked to sustainability

The Mexican Stock Exchange (BMV) launched a new instrument linked to the Environmental, Social and Governance (ESG) objectives of the companies: the Bonds Linked to Sustainability, which allows companies to obtain resources for corporate and general operational purposes, but whose rate may have increases or decreases depending on the achievement of certain objectives and indicators (KPIs) of sustainability.

The main difference that these instruments have with green, sustainable or social bonds is that the resources obtained are not labeled, or conditioned, to ESG projects, but are linked to the fulfillment of some key indicator.

The bonds maintain the same regulatory and operational framework as other debt instruments, will be identified with the letter ‘L’, and can be issued by any company, the BMV detailed in a statement.

“These new instruments offer a new investment alternative to those market participants interested in issuers committed to sustainability in an integral way,” indicated the BMV.

The objectives will be based on the criteria issued by the International Securities Market Association (ICMA), and it will be an independent third party who validates that the chosen objectives and indicators are met, for which at least one review will be made. Once a year.

The companies issuing these bonds must select relevant and material indicators with the business strategy, they must be measurable with a consistent and verifiable base methodology. The BMV indicated that to the extent possible, the chosen KPIs should have been included in previous annual or sustainability reports, “so that investors can evaluate the historical performance of the selected KPIs.”

In May, the auto parts company Metalsa became the first to make an offer of a bond linked to Sustainability Criteria denominated in dollars. Grupo Proeza’s subsidiary raised $ 300 million due in 2031. The objective to which the bond rate is linked is the reduction of greenhouse gas emissions, which the company promised to reduce by 20% by the expiration of the instrument.

“The creation of this new product is the result of joint work with all participants in the stock market with the aim of providing investors with a variety of green financing instruments,” said the BMV.

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