Banco Galicia, one of Argentina’s largest privately-owned banks, is issuing a green bond to raise US$100 million to expand its lending program for climate-smart projects. This is the first green bond to be issued by a private financial institution in Argentina, signaling Banco Galicia’s commitment to financing projects with a positive environmental impact. IFC, a member of the World Bank Group and pioneer in supporting green bonds in emerging markets, will subscribe to the bond.
Green bonds help raise financing for projects that mitigate climate change. Proceeds from Banco Galicia’s bond will support energy efficiency, renewable energy, and sustainable construction projects, among others. These projects are expected to reduce greenhouse gas emissions in Argentina by about 157,500 metric tons of CO2 per year, roughly the equivalent of taking 33,700 cars off the road.
“The green bond reflects Banco Galicia's commitment to the environment, and consolidates its leadership in sustainable banking in Argentina,” said Fabián Kon, Banco Galicia’s CEO. “We are committed to offering our clients new financial instruments for projects that have a specific focus on the environment, such as renewable energy, energy efficiency, clean transport, and waste management.”
With a tenor of 7 years, Banco Galicia’s green bond will provide a source of medium to longer-term financing that is not readily available in Argentina to finance climate-smart projects.
IFC is at the forefront of helping develop green bonds in emerging markets, where few banks have issued such bonds. Last fiscal year, for example, IFC supported two banks in Colombia, Davivienda and Bancolombia, to issue green bonds. Banco Galicia’s is the 11th green bond that IFC has subscribed to since 2015 across seven emerging markets. Under its Green Bond Program, IFC has also issued 90 green bonds across 12 currencies amounting to a total of approximately $7.3 billion since 2010.
Argentina has some of Latin America’s most abundant renewable energy resources. Substantial investments in renewable energy are expected in the coming years, as the government has set its sights on diversifying the country’s energy matrix, easing dependence on fossil fuels, and reducing carbon emissions. Its target: to produce 20 percent of Argentina’s electricity from renewable sources by 2025.
“By subscribing to Galicia’s green bond, IFC is supporting a new asset class in Argentina that will help reduce carbon emissions,” said David Tinel, IFC Regional Manager for Argentina and the southern cone. “This is a novel approach that reflects the impact we can have when we combine innovative financing mechanisms with smart policy reforms, like those we are seeing in Argentina. We hope this bond paves the way for other issuers and investors to join in this important effort.”
In Argentina, IFC has committed approximately $2 billion in sustainable private sector projects over the past 18 months, becoming the largest international source of financing to the country’s private sector during this period. IFC’s strategy in Argentina is focused on financing projects with significant development impact for spurring economic growth, innovation and job creation. Priority sectors include agribusiness, infrastructure and renewable energy; competitive manufacturing; strengthening long-term financing for companies, including small and medium enterprises (SMEs); and helping improve investment climate for business start-ups and SME growth. For more information about IFC in Latin America and the Caribbean