Brazil Said to Consider ESG Bond Debut as Soon as September

Brazil is considering selling its first-ever sustainable bond as soon as September, according to a person familiar with the matter.

(Bloomberg) — Brazil is considering selling its first-ever sustainable bond as soon as September, according to a person familiar with the matter.

The nation’s debut in global ESG debt markets, which has been anticipated for years, may follow an investor roadshow in late August or early September, said the person, who asked not to be identified because the discussions are private. The terms of the deal, including exact timing and size, are still being discussed, said the person.

A representative for Brazil’s National Treasury said in an emailed statement that a sustainable bond transaction is expected to take place this year, in line with a timeline unveiled in January.

“The initiative asserts the country’s commitment to sustainable policies and converges toward the interest from non-resident investors and expansion of the international market for labeled securities,” according to a statement from the National Treasury.

The potential embrace of responsible investing under President Luiz Inacio Lula da Silva would mark a turnaround for Brazil, home to the majority of the Amazon rainforest. Lula has made an effort to prioritize the environment in his administration, contrasting policies seen under former leader Jair Bolsonaro.

Brazil has trailed other emerging-market peers in joining the rush for debt linked to environmental, social or governance issues. The nation took a step toward that goal last month, with a formation of a committee on sustainable financing to prepare a framework for ESG sovereign bond sales.

Some 16 governments have tapped the global market for ESG debt so far this year, issuing a total of $70 billion of green, social or sustainability bonds, according to data compiled by Bloomberg. 

The discussions come as S&P Global Ratings improved its credit outlook on the country amid signs of greater certainty about fiscal and monetary policy. 

A new fiscal framework introduced this year by Lula’s administration has been gaining momentum, clinching a key lawmaker approval last month that pleased investors.

Brazil is also considering plans to tap the $2.25 billion of 6% bonds due 2033, which was sold in April, in the coming weeks, said the person familiar with the matter. The country is weighing an increase to the size of the 10-year bond, in part, to provide a more-liquid reference for investors in an eventual sustainable bond, the person said.

A representative for the National Treasury said it’s monitoring the market for potential issuance windows, without providing details of the specific plans for the bond tap. 

–With assistance from Daniel Covello.

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