The MXN$20 billion ($1.05 billion) Mexican sovereign bond was the first sustainable sovereign bond issued in pesos and aligned with ESG criteria, according to the Mexican Ministry of Finance and Public Credit.

Issued in May 2022, the 'BONDESG' transaction was designed to develop both the local sustainable finance market and to promote Mexico's sustainability agenda to international markets and investors.

"In the local portfolio of sovereign Mexican debt, the issuance was a ground-breaking issuance for being the first UN Sustainable Development Goal-aligned bond in the local market and also for the unusual format that was chosen," commented the Mexican Ministry of Finance.

The coupon payment is linked to Mexico's Interbank Equilibrium Interest Rate in one-day repo (TIIE de Fondeo).

The floating rate format was partly chosen to give the principal issuers in the local market – mostly development banks – a benchmark for future or recurring issuances.

"With this strategy, it is expected that local corporations will use BONDESG as a benchmark to issue their own ESG-aligned instruments and access cheaper financing sources in order to carry out sustainable projects," said the Ministry.

"Related to this, we are pleased to announce that in the coming quarters we will be issuing sustainable fixed-rate bonds in the local market. Furthermore, the growth of these markets will facilitate the creation of a comprehensive ecosystem that provides local and foreign issuers with benchmarks, volume, and liquidity for their debt issuance programs and projects."

More than 50 investors participated in the transaction and demand was four-times oversubscribed.