The Dominican Republic placed a first sovereign US$750 million green bond on 25 June 2024. The green bond sovereign sold 12-year notes. In a resounding demonstration of global investor confidence in the Dominican Republic’s commitment to sustainability, the country’s inaugural green bond issuance received an overwhelming response, with demand from international investors exceeding the offered amount by six times.
The sovereign green bond, valued at US$750 million, was met with enthusiastic participation from a diverse range of investors, including asset managers, pension funds, and insurance companies. This strong interest underscores the growing appetite for environmentally responsible investment opportunities, particularly in emerging markets like the Dominican Republic.
Proceeds from the bond sale will be exclusively allocated to finance eligible green projects aligned with the Dominican Republic’s Sustainable Bond Framework. These projects encompass a broad spectrum of initiatives aimed at promoting clean energy, sustainable transportation, climate-resilient infrastructure, and efficient water management.
The including of thematic bonds in our national financial plan, in addition to the environmental and social benefits, are an example of our commitment with the transparency in the management of the public debt, and at the same time diversify the base for investors, said Maria Jose Martinez, Vice Minister for Public Credit when explaining the new placement in a post on X.
The Ministry of Hacienda stressed the outcome of the placement is an indicator that capital markets once more show their trust in the commitment of the government to protect the environment, social needs and sustainable development, and in the solid performance of the Dominican economy.
The Ministry of Hacienda explained in a post on X that the new 12-year green notes carried a coupon of 6.70%, approximately 15 basis points lower than what would have been achieved with other non-thematic instruments with a similar term.
“With the results of this issue, the capital markets have once again shown their confidence in the government’s commitment to the protection of the environment, social needs and sustainable development, as well as the solid performance of the economy,” the ministry added.
The Ministry of Hacienda (Finance) has established that green bond funds be used to finance or refinance, in whole or in part, green projects that enable the achievement of the medium and long-term decarbonization targets. The country is committed to a 27% reduction in greenhouse gas (GHG) emissions by 2030.
The funds can be used for low-carbon transport, including monorails, metros, trams and railways. Also for efficient and resilient management of water and wastewater, including sanitation, drainage and irrigation systems, the rehabilitation of ravines and relocation of homes in vulnerable areas surrounding the ravines, and rehabilitation and improvement and expansion of sanitary sewer coverage. Likewise, the funds can be used for renewable energy projects, including solar energy, wind power and hydroelectric power (under 25 MW). Natural resources and the use of soils are targeted beneficiaries, with sustainable agriculture, and the conservation, restoration and sustainable management of watersheds contemplated.
A first private green bond had been issued to raise cash for the Dominican energy company EGE Haina in support of the expansion of its Larimar I wind farm, located in the country’s southwestern Barahona province. That bond was handled by the financial entity Grupo Popular, the parent company of major bank Banco Popular.
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26 June 2024