Championing the first Peruvian subordinated thematic bond

Project summary: In December 2024, we partnered with BanBif in its landmark issuance of Peru’sfirst subordinated thematic bond.

We had been promoting the benefits of thematic instruments in Peru for several years when BanBif approached us. We immediately started working closely with the bank to ensure the bond’s success.

Driving groundbreaking firsts is key to growing the Peruvian green bond market

Peru is an investment-grade country, but there have been few thematic issuances to date. BanBif’s issuance sends a strong signal to the Peruvian market, setting a precedent and attracting interest from other actors looking to issue similar bonds.

This collaboration was our first end-to-end engagement – from capacity building to portfolio identification and issuance, we are working holistically with a new issuer coming to market. Following this, we have committed to partnering with BanBif to create its impact report and improve collection and processing systems for end-client data.

With our support and following our investment, the bank has the capacity to issue new tranches of the bond, which can mobilize further investors into the Peruvian sustainable finance market.

This engagement underscores our commitment to fostering sustainable finance and highlights the role of LAGreen as the go-to partner for catalyzing new issuances in the market.

Impact Spotlight: Enabling BanBif to issue the first Peruvian subordinated thematic bond

LAGreen has supported and promoted thematic instruments in the Peruvian market since its inception. Following several local events and engagements, including the publication of the Peruvian Sustainable Finance State of the Market Report, opportunities started to emerge.

BanBif recognized our efforts and impact on the market and expressed an interest in issuing its first thematic bond. We were quick to respond and, together, we devised a plan to bring this issuance to market.

Firstly, in 2023 we supported BanBif in identifying its eligible green portfolio in alignment with ICMA’s Green Bond Principles. Analyses highlighted significant opportunities, particularly in agriculture and energy efficiency, representing 49.7% and 21.7% of the portfolio respectively.

Then, we conducted a feasibility study to evaluate green financing categories, based on financial impact, reputational benefits, and the potential for generating new business lines. Categories such as sustainable management of natural resources, renewable energy, and green buildings were identified as highly feasible and beneficial.

Acting as a tool for BanBif, we provided the necessary support to draft a green bond framework, which was finalized in July 2024. As a final step, BanBif engaged S&P to obtain a second-party opinion on the framework. Following this, the bank worked with our Advisory & Capacity Building team throughout the issuance process.

This bond will finance vital projects

This inaugural issuance features a 10-year maturity and an initial tranche of USD 20 million. It is part of a broader USD 200 million program designed to channel sustainable financing to the issuer and the country over the next five years.

It will directly channel resources to projects that support the transition to a more resilient, low carbon economy. Categories selected in the framework align with the country’s priorities and challenges, including reducing GHG emissions and tackling environmental challenges such as biodiversity loss and water supply issues.