Natixis Acts as Sole Sustainability Structurer and Joint Book Runner in Mexico’s historic, debut Sustainable Development Goals Bond

New York, NY, USA, September 22, 2020

Natixis was pleased to act as Sole Sustainability Structurer and Joint Book Runner in connection with Mexico’s historic, debut Sustainable Development Goals (SDG) Bond.

In a series of pioneering milestones, the € 750million, seven-year Bond represents Mexico’s first-ever Sustainable Development Goals (SDG) Bond and the first SDG Bond issued by a sovereign country. This is also the first SDG to feature the participation of the United Nations (UN), through the United Nations Development Program (UNDP).

The transaction was announced at the UK open at MS+235 bps area and the book steadily built throughout European morning hours. The deal was then re-announced into the U.S. open with the book exceeding €2.5bn in orders by 7AM NY time, and peaking at €4.8bn from roughly 267 accounts. The transaction launched $750mm at MS+195 bps. The compression achieved allowed Mexico to print its second lowest coupon and one of its largest order books in the Euro market.

A significant portion of the transaction (~EUR 549mm out of EUR 750mm, ~73%) was allocated to “sustainable investors” - investors incorporating ESG criteria in FI investments:

  • 46% of the transaction (~EUR 349mm) was allocated to “strongly committed” funds (i.e. dedicated green and/or sustainable bond funds and/or mandates)
  • 20% of the transaction (~EUR 149mm) was allocated to “partially committed” funds (i.e. that incorporate ESG criteria in their investment decisions)
  • 7% of the transaction (~EUR 52mm) was allocated to “lightly committed” funds (i.e. PRI signatories, but not active players in the broader RI market)

Overall, the transaction speaks to the value investors are placing on sustainable bonds and the expansion of the development finance market.

Natixis provided guidance and expertise to the Government of Mexico on the development of its new SDG Sovereign Bond Framework, which was first released in February and through which the SDG Bond was issued. Among the unique features of the framework are a transparent linkage of the Federal Budget to the SDGs, the application of a geospatial eligibility criteria to ensure that only budgetary items targeting municipalities with the highest SDG gaps are selected, and enhanced impact reporting.

The action highlights the country’s efforts to advance a strong commitment towards the SDGs and the alignment of its framework with the principles and objectives of the Sustainable Development Goals. This also includes their innovative work on mapping the Federal Budget to the United Nations  SDGs and the 2030 Agenda for Sustainable Development, adopted by all UN Member States in 2015.

The inaugural SDG Bond is focused on programs oriented towards education, health, and habitat basic services. Eligible Sustainable Expenditures will be subject to a geospatial eligibility criterion in order to ensure that those expenditures are directed to regions where Mexico’s SDG gaps are greatest. Additional data will ensure the inclusion of budgetary programs targeting the most needed territories and populations.