Brazil readies first ESG bond, eyes Sep-Nov window, official says

By Marcela Ayres and Bernardo Caram

BRASILIA (Reuters) – Brazil’s government on Tuesday outlined plans for its first sustainable sovereign bond issuance in the next few months to fund environmental projects and social spending.

The Treasury said it has scheduled a series of meetings with investors abroad next week to pitch the new bond issue, which is part of the green policy agenda at the center of President Luiz Inacio Lula da Silva’s third non-consecutive term.

Treasury Secretary Rogerio Ceron told Reuters that the issuance will take place during the most opportune market window, which could be just after this month’s roadshow or as late as November.

“It is likely to be a substantial operation, perhaps exceeding $1 billion. However, the exact amount, whether it will be $2 billion, $3 billion, or $2.5 billion, is something we cannot determine at this moment,” he said.

The Brazilian Treasury said funds will be allocated to government spending with environmental or social benefits across 17 predefined areas, including greenhouse gas emissions reduction, deforestation mitigation and hunger alleviation.

Ceron said the ESG bond framework unveiled on Tuesday should serve as the guidelines not only for the upcoming bond issuance but for future operations as well.

The guidelines include eligible areas for funding and establish performance indicators and expected benefits through 2030, along with subsequent accountability reports until bonds mature, he said.

“It forms the foundation for an issuance program,” Ceron said, flagging plans for more operations in coming years.

The Treasury chose the “use of proceeds” model for the operation to ensure the issue serves as a strong benchmark in global markets and supports corporate issuances, he added.

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