Mexico City’s new airport is planning to issue the first of what could be up to US$6bn in green bonds through a special purpose trust according to IFR.
Reuters reported that Citigroup, HSBC and JP Morgan are acting as global coordinators on the deal, whilst BBVA and Santander will participate as bookrunners.
In October last year, the airport secured a 5-year US$3bn RCF that would cover the first phase of construction at the new international airport. The total cost of the new airport is expected to be around US$13bn however.
“The US$3bn revolving credit facility offers sufficient funding for both this year and for most of 2017,” said Ricardo Duenas, CFO at GACM, the state-owned sponsor of the airport.
The reasons behind green bonds having been chosen as a financing instrument would be similar to other issuers, mainly to emphasise the environmental and sustainability aspects of the development, as well as to attract a more diverse range of investors, including international investors according to Justine Leigh-Bell, director, market development at Climate Bonds Initiative.
Green bonds are becoming an increasingly mainstream form of climate-friendly finance, particularly for infrastructure developments, and there has been around US$150bn of labelled green bond issuance so far globally.
Leigh-Bell noted that the Mexican government has commitments around infrastructure development, particularly in clean energy and transportation.
“There is growing recognition between the government and the private sector that green finance options must be further developed.”
Green bonds have already been issued in Mexico, the country’s first was a US$500mn 5-year issuance in 2015 from the nation’s development bank Nacional Financiera (Nafin) to finance a portfolio of wind farms located across the country.
Nafin, in a first for Latin America also issued a local currency-denominated green bond at the end of August, amounting to a MXN2bn (US$107mn) 7-year note.
“We see that there is further momentum [in Mexico] with the announcement that a green finance committee has been formed with senior representation from business and finance. We expect this will lead to further issuance, with the Mexico City new airport bond an early indication of that momentum,” Leigh-Bell stated.
Mexico City itself will be able to issue green bonds once the city gains state-like powers in January.