The Republic of Colombia secured the sovereign green bond of the year award after raising COP750 billion ($200 million) from its upsized maiden green note in September 2021, becoming the first Latin American country to issue a green bond in its domestic market.

The landmark 10-year green bond made Colombia the second Latin American country to issue a green bond, after Chile kicked-off its prolific international green bond programme in 2019.

The Colombian transaction also pioneered the use of the 'twin bond' concept among emerging market issuers. This means each green bond is 'twinned' with a conventional bond with the same maturity with which it can be exchanged, improving liquidity for the green instrument.

The judges applauded the fact that – despite Germany introducing the innovative 'twin' green bond concept in August 2020 – Colombia was "quick to react in its local market with an innovative structure that preserved the liquidity of its issuance".

Initially, Colombia had intended to raise COP500 billion from its debut issue but it was upsized by 50% after investor demand sent the orderbook to COP2.3 trillion.

Colombian finance minister José Manuel Restrepo described the bond as an "important step" towards the country generating an alternative way to finance investment in 'green' projects in the country by helping to develop a domestic green bond market, as well as diversify its investor base.

Under its framework, Colombia identified COP2 trillion in eligible green projects that could be financed through green bonds – with the government intending to raise up to COP1.6 trillion from its initial green bond programme. In October, Colombia raised a further COP650 billion from its second green bond.

“Colombia sees its green bond issuances of 2021 as the beginning of a permanent programme,” a finance ministry spokesperson told Environmental Finance. “We are working on the second portfolio of green expenditures to be included in the 2022 national budget. The first green bond auction of this year is expected in June. We are also currently working to extend the scope of the current framework, to include social expenditures – which would allow Colombia to issue green, social or sustainability bonds.”