COFIDE: Empowering Peruvian MSMEs for sustainable development
In March 2024, we welcomed a special delegation from the Peruvian development bank Corporación Financiera de Desarrollo (COFIDE) to the Luxembourg Stock Exchange (LuxSE), where local actors were invited to learn more about the bank’s new Thematic Bond Framework. Flash forward to May, and COFIDE’s first international sustainable bond was listed at LuxSE and displayed on the Luxembourg Green Exchange (LGX).
To talk about COFIDE’s journey into sustainable finance on the international capital markets' stage, we sat down with its CEO, Mr Paul Bringas.
When Peruvian development bank COFIDE made its sustainable debut on international capital markets in May 2024, its USD 300 million social bond was met with much interest. Among other categories, the bond aims to finance projects that contribute to improve the social and financial inclusion of vulnerable groups in Peru and strengthen access to essential services such as affordable housing, education and healthcare.
“During pricing, at peak, the orderbook was more than 4 times oversubscribed and at closing, ended up being nearly 3 times oversubscribed. High-quality institutional real money accounts dominated the scene with asset managers, insurance companies, pension funds and banks taking around 94% of total demand,” said Mr Paul Bringas, CEO of COFIDE when speaking about the story around this issuance, its subsequent listing on our EURO MTF and display on LGX, the world’s leading platform for sustainable securities.
“It was so important for us to show our new framework and get the opportunity to explain in great detail what COFIDE’s role as Peru’s development bank entails. Our non-deal roadshow at LuxSE allowed us to connect with a new potential investor base – and this made a difference for our social bond issuance, especially on pricing day”
“In 2023, COFIDE received an invitation from BVL to apply for the Technical Assistance Program for the Issuance of Thematic Bonds, an initiative led by GGGI in collaboration with the stock exchanges of Colombia, Asunción and Lima, which aims to support the issuance of thematic bonds in Colombia, Paraguay and Peru, through technical assistance and capacity building for issuers and other relevant market participants,” says Mr Bringas.
It is within the scope of this technical assistance programme that GGGI supported COFIDE in the creation of its Thematic Bond Framework, which was unveiled to the public in September 2023, and was the focus of the bank’s non-deal roadshow at LuxSE in March 2024.
“First and foremost, we need to protect the well-being of the Peruvian people and give them access to opportunities. This is exactly what our USD 300 million social bond sets out to do.”
Funding from this inaugural social bond issuance is being directed towards enhancing the access of Peruvian MSMEs to financing and broader assistance, with a particular emphasis on businesses owned or led by women, primarily within the country’s commerce and services sectors.
Thinking about COFIDE’s experience as a first-time issuer of a sustainable security on international capital markets, Mr Bringas is eager to provide advice to those who may be planning to follow suit.
“We learned a lot on this first journey into sustainable international capital markets. It required plenty of teamwork, collaboration, and willingness to learn. To any issuer that is preparing to take its first steps into the sustainable debt market, I would recommend the following: properly design your framework. Make sure that you include all the categories and sectors you wish to serve.”
“In terms of geographic distribution, demand primarily came from U.S. and European accounts, making up 48% and 35% of investment, respectively. Latin American investors accounted for 11% with Asian issuers making up the final 6%,” says Mr Bringas.
What was the most important outcome of this international bond issuance? According to Mr Bringas, it resulted in a much larger amount of capital being raised, thanks to an ample base of investors around the world – proving the power of international capital markets when it comes to reorienting capital flows towards crucial sustainable development projects in emerging markets.
If you would like to learn more about COFIDE’s inaugural social bond and the important projects it is funding to help improve the lives of people in Peru, consult the bank’s issuer card on LuxSE’s website.
To talk about COFIDE’s journey into sustainable finance on the international capital markets' stage, we sat down with its CEO, Mr Paul Bringas.
International & sustainable debut
Established in 1971 in Lima, COFIDE’s mission is to secure the sustainable and inclusive development of Peru, for all Peruvians. This includes a focus on micro, small and medium-sized enterprises (MSMEs) - enterprises which, according to the Organisation for Economic Co-operation and Development (OECD), accounted for 99.4% of all enterprises in Peru in 2022.When Peruvian development bank COFIDE made its sustainable debut on international capital markets in May 2024, its USD 300 million social bond was met with much interest. Among other categories, the bond aims to finance projects that contribute to improve the social and financial inclusion of vulnerable groups in Peru and strengthen access to essential services such as affordable housing, education and healthcare.
“During pricing, at peak, the orderbook was more than 4 times oversubscribed and at closing, ended up being nearly 3 times oversubscribed. High-quality institutional real money accounts dominated the scene with asset managers, insurance companies, pension funds and banks taking around 94% of total demand,” said Mr Paul Bringas, CEO of COFIDE when speaking about the story around this issuance, its subsequent listing on our EURO MTF and display on LGX, the world’s leading platform for sustainable securities.
Testing the waters
But such a buzz was not created overnight. In March 2024, representatives from the bank travelled to Europe to take part in a number of non-deal roadshows highlighting the bank’s new Thematic Bond Framework – one of which was organised at LuxSE with the help of our Sales & Relationships Management team and sustainable finance experts.“It was so important for us to show our new framework and get the opportunity to explain in great detail what COFIDE’s role as Peru’s development bank entails. Our non-deal roadshow at LuxSE allowed us to connect with a new potential investor base – and this made a difference for our social bond issuance, especially on pricing day”
A story of collaboration & support
Bringing what COFIDE hopes to be just the first of many sustainable bonds to international capital markets came as a result of close cooperation – not just with LuxSE, but also with the Lima Stock Exchange (BVL) and the Global Green Growth Institute (GGGI).“In 2023, COFIDE received an invitation from BVL to apply for the Technical Assistance Program for the Issuance of Thematic Bonds, an initiative led by GGGI in collaboration with the stock exchanges of Colombia, Asunción and Lima, which aims to support the issuance of thematic bonds in Colombia, Paraguay and Peru, through technical assistance and capacity building for issuers and other relevant market participants,” says Mr Bringas.
It is within the scope of this technical assistance programme that GGGI supported COFIDE in the creation of its Thematic Bond Framework, which was unveiled to the public in September 2023, and was the focus of the bank’s non-deal roadshow at LuxSE in March 2024.
Focus on female-led MSMEs
As a country with more than 34 million people, the need to accelerate sustainable development in a way that both aligns with the United Nations Sustainable Development Goals (UN SDGs) as well as Peru’s national priorities is key, according to Mr Bringas, and he shares a few ideas on how to proceed:“First and foremost, we need to protect the well-being of the Peruvian people and give them access to opportunities. This is exactly what our USD 300 million social bond sets out to do.”
Funding from this inaugural social bond issuance is being directed towards enhancing the access of Peruvian MSMEs to financing and broader assistance, with a particular emphasis on businesses owned or led by women, primarily within the country’s commerce and services sectors.
Thinking about COFIDE’s experience as a first-time issuer of a sustainable security on international capital markets, Mr Bringas is eager to provide advice to those who may be planning to follow suit.
“We learned a lot on this first journey into sustainable international capital markets. It required plenty of teamwork, collaboration, and willingness to learn. To any issuer that is preparing to take its first steps into the sustainable debt market, I would recommend the following: properly design your framework. Make sure that you include all the categories and sectors you wish to serve.”
Only the beginning
Now that this inaugural issuance has proven that there is both domestic and international appetite for investment opportunities that contribute to the sustainable development of a country that is home to one of the seven modern wonders of the world – Machu Pichu – Mr Bringas and his team are casting their eyes to the future.“In terms of geographic distribution, demand primarily came from U.S. and European accounts, making up 48% and 35% of investment, respectively. Latin American investors accounted for 11% with Asian issuers making up the final 6%,” says Mr Bringas.
What was the most important outcome of this international bond issuance? According to Mr Bringas, it resulted in a much larger amount of capital being raised, thanks to an ample base of investors around the world – proving the power of international capital markets when it comes to reorienting capital flows towards crucial sustainable development projects in emerging markets.
If you would like to learn more about COFIDE’s inaugural social bond and the important projects it is funding to help improve the lives of people in Peru, consult the bank’s issuer card on LuxSE’s website.
