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BTG Pactual considering further green bond, other thematic issuances
Debt Capital Markets
Image source: Redd Intelligence

Strategic Considerations: Banco BTG Pactual sold its first green bond through a private placement at the end of last month. The USD 50m transaction was purchased by a single investor and was a way for the bank to test the green, social, and sustainable financing framework it had been working on for the past few months. The firm received positive feedback from other investors and could carry out a public transaction in the future. BTG Pactual also sees opportunities in the social and sustainability bond markets.

  • BTG Pactual has a sustainable project pipeline amounting to more than BRL 5bn
  • The bank recently took out a USD 140m climate loan from European development agencies

Banco BTG Pactual, the Brazilian financial-services provider, could issue more green bonds and other thematic notes, said Caio Zanette, associate partner at the firm, in an interview with this news service.

The bank sold its first green bond via a private placement last month, Zanette said. The USD 50m 3.3% five-year bond priced at par and was sold to a single investor, he added.

BTG Pactual could do a public bond issuance when market conditions are better, the executive said.

The bank spent the last few months establishing its green, social, and sustainable financing framework, Zanette said. The framework is “credible and impactful,” according to second-party opinion provider Sustainalytics.

The firm structured the transaction “to test the waters,” Zanette said. The framework “is strong… we have positive feedback from other investors."

BTG Pactual came to market at this time because “there is a great market opportunity and demand for anything” related to green and social investing, the executive said. Additionally, the bank is “already fairly keen on the ESG agenda… it is something we started years ago."

The firm will use proceeds of green bonds issued under the framework for eligible projects in categories including renewable energy, energy efficiency, sustainable water and wastewater management, clean transportation, and green buildings.

The green bond’s proceeds have been deployed already, and the financial-services firm has an eligible pipeline of more than BRL 5bn (USD 975.7m at today’s exchange rate) of sustainable projects, Zanette said. BTG Pactual also has “huge” possibilities in the social and sustainability bond markets, he added. “Brazil is a developing country with lots to do on the social front.”

Still, the green label remains more appealing to investors as some of them have reservations on the social front, the executive said. There is a concern that the “benefits are a bit harder to quantify,” he said.  

Zanette expects the ESG agenda to “progress quite fast” as demand from investors picks up. BTG’s investment-banking division is seeing a lot of corporates seeking to incorporate ESG principles into their operations, he added.

Beyond the recent green bond, the bank has structured loans with environmental and social objectives. On Friday, French development bank Proparco and German development finance institution DEG announced that they had granted a USD 140m climate loan to BTG Pactual, according to a press release. The funds will finance the growth of the bank’s green-loan portfolio.

The US International Development Finance Corporation (DFC) also granted a USD 300m loan to expand the bank’s small-and-medium-enterprise loan portfolio, according to US government information. The proceeds will be directed to the “economically disadvantaged regions” in North and Northeast Brazil.

by Carla Dager, Guayaquil

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