Blue bond for water conservation, water infrastructure and water use efficiency

2023

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Summary

In June 2023, BBVA issued Colombia’s first blue bond in a transaction that unlocks finance for projects that support ocean health and protect Colombia’s water resources. BBVA collaborated with IFC for the initial tranche of USD 50 million, aligning the transaction with the IFC Blue Finance Guidance Framework in line with ICMA’s Green Bond Principles. The capital raised from both private and public sources will be allocated to finance projects including the construction of water treatment and sewage facilities, the rehabilitation of watersheds, improvements in irrigation and drainage systems, and the conservation of marine and coastal ecosystems such as mangroves. Among the projects receiving finance, a number complement the Colombian Government’s National Development Plan, which includes more than 20 projects of significant national impact related to water.

Key Takeaways:

Leveraging experience: Given that BBVA already participated as a joint book-runner in the first local green bond in 2021 and the first international social bond in the country in 2023, the bank was well-placed to issue Colombia’s first blue bond.

Leveraging international frameworks: Aligning instruments such as blue bonds with international principles and guidance builds investor confidence and supports growth in the market for innovative mechanisms.