Key Impact Points:
- First Green Bonds Issuance: Dominican Republic raises $750M with a 6.70% rate, saving on financing costs.
- Strong Investor Demand: Foreign investors’ interest exceeded issuance by six times, showcasing confidence in sustainable development.
- Debt Strategy and Impact: Bonds are part of the 2024-2028 debt strategy, enhancing environmental and social benefits while diversifying the investor base.
The Dominican Government, through the Ministry of Finance, has made history by issuing its first green bonds, totaling $750 million. These bonds achieved a rate of 6.70%, approximately 15 basis points lower than what would have been achieved with other non-thematic financing instruments of a similar term.
Green Expenditures and Climate Mitigation
Jochi Vicente, the head of the Treasury, explained that the funds obtained from this issuance will be used for green expenditures, as outlined in the country’s first Reference Framework for Green, Social, and Sustainable Bonds, published last week. Vicente emphasized, “This initiative not only implies savings for public finances due to the lower financing cost but also supports projects aimed at mitigating the effects of climate change, to which the Dominican Republic is highly vulnerable.”
Strong Investor Confidence
The green bonds received demand from foreign investors in global capital markets that was six times higher than the amount issued. This significant interest demonstrates confidence in the Dominican Government’s commitment to environmental protection, social needs, and sustainable development, as well as the robust performance of the Dominican economy. “Each time we access international capital markets, we receive notable support, which is partly due to our effective public debt management,” Vicente highlighted.
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María José Martínez, the Vice Minister of Public Credit, noted that these green bonds are part of a sustainable emissions program included in the 2024-2028 debt strategy. This program aligns with the goals set in the National Development Strategy 2030. Martínez emphasized, “The inclusion of thematic bonds in our financing plan not only promotes environmental and social benefits but also exemplifies our commitment to transparency in public debt management and diversifies our investor base.”
Strategic Debt Management
Additionally, this operation was complemented by the repurchase of $1.009 billion of an external bond maturing in 2025. To facilitate this repurchase and to cover part of the 2024 General State Budget financing needs, RD$105 billion of an external bond in local currency maturing in 2036 and $500 million of a reopening maturing in 2031 were issued. These operations have significantly impacted the debt portfolio of the non-financial public sector by decreasing the percentage of foreign currency financing and increasing the average maturity time of the global bond portfolio.
