Market Insights

As a result of the impacts of climate change and the societal issues magnified by the global pandemic, Latin America’s public and private issuers and investors are focusing on ESG (environmental, social and governance) factors, and solutions that enable sustainable development.

As these companies emphasize ‘purpose’ within their capital markets activities, Scotiabank’s Global Banking and Markets team is demonstrating its ESG expertise. Through its seamless regional and global connectivity, the team has delivered innovative solutions, from a sizable green bond in Chile, to a unique gender-focused social bond in Mexico that supports women who lead agricultural businesses.

Helping decarbonize Chile’s power sector


In mid-July 2021, Scotiabank led ISA Interchile’s debut transaction in international debt capital markets, issuing US$1.2 billion senior secured green notes due in 2056. This landmark transaction ranked as the largest green project bond in Latin America and the Caribbean in the power and utility sector1.

As a major electricity transmission provider in Chile, and part of Grupo ISA of Colombia, Interchile is bringing sustainability to the national energy market as part of its corporate commitment to ‘Connections that inspire the development of Latin America.’  In fact, Interchile’s Green Financing Framework emphasizes the installation of electricity transmission lines to supply low-carbon and renewable energy to the national power grid.2 These projects are critical to reach Chile’s pledge to deliver 70% renewable power by 2030, eliminate coal power by 2040 and achieve carbon neutrality by 2050.

To lead this important transaction, Interchile selected Scotiabank as its Sole Global Coordinator and Joint Bookrunner, Green Structuring Agent, Ratings Advisor and Billing and Delivery Bank. Interchile took note of Scotiabank’s extensive sustainable finance capabilities and knowledge of the power and utility sector in the Americas.

“Through our long-standing relationship with Grupo ISA, we appreciated their deep commitment to sustainability in Latin America and to help decarbonize Chile’s energy system,” notes Carlos Garcia, Director, Latin America and Caribbean Debt Capital Markets. “As a first-time issuer to international debt markets, ISA entrusted Scotiabank to reach highly discerning foreign ESG investors. We delivered holistic sustainable financing advice, to help structure their Green Financing Framework and bond issuance, to earn the ‘Green Bond Principles’ label and second party opinion, and craft a green marketing strategy that garnered exceptional investor interest. Ultimately, we helped Interchile deliver a ‘landmark transaction’, in terms of its size, low coupon rate, and long tenor.”3

Indeed, the Bank’s intensive preparatory work paid off when demand from more than 100 global investors in the Americas, Europe and Asia exceeded US$2.5 billion, including dedicated sustainable funds drawn to the green bond label. Ultimately, Interchile successfully launched the US$1.2 billion issuance at 4.5%, representing significant price tightening and one of the lowest financing costs in dollars of any transmission company project bond in the region.

Aquiles Vargas, ISA Interchile’s Chief Financial Officer, explained that, “This is a historical debt instrument for our subsidiary, for ISA as a whole and for Latin America, not only because of its historical magnitude, exceeding one billion dollars, but also because it is high rating project finance granted by the main rating agencies and for its green certification, which is of utmost importance in the context of climate change to help set a standard for the financial world.”2

This transaction is a testament to Scotiabank’s growing capabilities in sustainable debt capital markets across the Americas. Scotiabank has built a very strong team across its extensive Americas presence, to provide specialized expertise and cross-border collaboration needed to build major transaction strategies, market them globally, and execute seamlessly.

Scotiabank’s ongoing support for Grupo ISA in Colombia, Chile, Brazil and Peru, and the intense cooperation during Interchile’s green bond transaction among Scotiabank’s Latam and Caribbean DCM group, Corporate Banking teams in Chile and Colombia, Project & Infrastructure Finance team and the Bank’s global Syndicate, Sustainable Finance, Fixed Income, Sales & Trading, and Transaction Advisory teams. 

Driving social development in Latam


With the ‘S’ in ESG gaining recent prominence, as governments and organizations pledge to address social, health and economic inequality, Scotiabank is also becoming an active issuer of sustainability-linked and social bonds that strive to remedy these complex challenges.

For example, in mid-2021, Scotiabank acted as Joint Bookrunner to help FIRA (the Fideicomisos Instituidos en Relación a la Agricultura), achieve its mission of “Con FIRA, Sí es posible!” (With FIRA, it is possible!) and help women in rural communities develop their own farm businesses. As a federal agency that supports the development of Mexican agricultural industry, FIRA wanted to fund a social bond, aligned with the United Nations’ Sustainable Development Goals. Its proceeds would help women-led businesses access credit, guarantees, support and production contracts to help them build economic resilience.

FIRA selected Scotiabank to support its ‘FEFA 21G gender focused social bond’, with a 3-year term totaling up to US$175 million, due to Scotiabank’s proven ability to provide exceptional delivery on a full shop of solutions, from lending to derivatives to ESG advisory, including local currency bond issuances over the past eight years. “We have the unique ability to connect the dots for clients across our businesses and provide very integrated solutions, including our global ESG expertise and our local teams’ skill at bringing issuers and investors to the table,” explains Vinicio Alvarez Acevedo, Managing Director and Head, Debt Capital Markets, Mexico.

Since this was the first bond of its kind in Mexico to include a gender component, Scotiabank’s team performed extensive outreach to investors to promote FIRA and the ground-breaking social objectives of the bond proceeds. As a result, the issuance was extremely successful, achieving very high investor demand, significant pricing compression, and helping establish the fledgling gender bond market for future issuers. 

Quenching Mexican thirst for green bonds

Also in Mexico, last spring, Scotiabank served as Joint Bookrunner on a US$233 million green bond issuance by AC Bebidas, a subsidiary of Arca Continental. As one of the largest producers and distributors of Coca-Cola brands in the Americas, AC Bebidas turned to Scotiabank Mexico as they pursued their sustainable financing framework.

The beverage-maker wanted to issue a green bond whose proceeds would be directed to projects aligned with the Green Bond Principles, ranging from renewable energy and eco-efficient industrial technologies to production processes that contribute to the circular economy. To do so, AC Bebidas chose Scotiabank, given their three-decade relationship with the Bank, the team’s domestic and global expertise in green bonds, and its network of green-minded institutional investors.

The team hosted 24 one-on-one video conferences and a group conference call with key Mexican investors, to highlight AC Bebidas’ innovative environmental initiatives. This helped shape the two tranches, floating and fixed rate bonds, producing an order book that was four times over-subscribed with a diverse mix of investors, despite any shadow the COVID-19 pandemic cast over the capital markets. Ultimately, the successful May 7, 2021 transaction achieved the lowest spread for a corporate issuer in recent history.  

“Mexico really symbolizes how sustainability is taking hold in Latam markets,” observes Vinicio Alvarez Acevedo. “While companies are taking a strong interest in ESG, and many are embedding sustainability commitments in their financing activities, institutional investors are expressing a strong appetite for ESG-labelled products. We are confident that these practices are here to stay, since companies and investors are recognizing that sustainability is very relevant. And, we are well positioned, in Mexico and across Latam, to help our clients integrate their market needs with their desire to benefit both the planet and their business.”

Interchile, FIRA and AC Bebidas are among the many companies making a high-profile commitment to ESG and sustainable finance. As a leading bank across the Americas, with a respected history of delivering green financings, Scotiabank issued a Climate Commitment to mobilize $100 billion by 2025 to reduce the impacts of climate change. The Canadian-based bank has built up a strong Sustainable Finance group with expertise in financing, advisory, innovation and research, complemented by experience and capabilities on-the-ground in Latin American capitals of finance. 


For more information, please contact:

Vinicio Alvarez
Managing Director and Head, Debt Capital Markets, Mexico

Phone: 52-55-9179-5222   

Carlos Garcia
Director, Latin America and Caribbean Debt Capital Markets

Phone: 1-212-225-5714