On September 11, Scotiabank’s Mexican subsidiary issued its first Green Bond in the Mexican market as part of a 3-tranche broader offering that supports the Bank’s commitment to grow its sustainable financing platform. The 3-year floating-rate MXN$4.3 billion (~US$219 million) Green Bond marked the first labelled debt issuance in Mexico and the fifth labelled benchmark issuance across Scotiabank’s footprint.
The inaugural Green Bond represents another step forward in Scotiabank’s broader global climate-related finance objective and builds upon its sustainable financing experience across the North American corridor, particularly in Mexico’s fast-growing ESG debt markets.
“We are excited to launch this Green Bond in the Mexican market,” said Daniel Gracian, Director, Sustainable Finance, Scotiabank. “The launch reflects the value of our on-the-ground teams and their unique ability to support the investment needs of local markets like Mexico.”
Key Transaction Details
- 3-tranche offering that addresses different terms, rates and currency needs for investors
- MXN$4.3 billion (~USD$219 million) 3-year Floating Rate Green Bond due 2027, US$23.8 million (~MXN$472 million) 3-year Fixed Rate Notes due 2027 and MXN$3.9 billion (~US$200 million) 7-year Fixed Rate Notes due 2031
- Order book reached an over-subscription of 2.39x the target amount of MXN$5 billion (~US$252 million) on the pricing date
- The strength and quality of the order book allowed the transactions to price at IPT levels over the benchmark rates
Gauging local market feedback through a collaborative process
Scotiabank Mexico’s team conducted a transaction marketing process to gauge local investor feedback, including 14 one-on-one video calls with key investors and a broader investor group from across the whole Mexican territory.
“We found significant appetite for this type of issuance in the local market during our meetings,” said Vinicio Alvarez, Managing Director and Head, Debt Capital Markets, Mexico. “We believe this offering meets a wide range of investment needs, and we’re proud of our collaborative approach and the results we achieved.”
A global approach that supports Scotiabank’s climate-related initiatives
Scotiabank will allocate the net proceeds from the Green Bond offering to finance or refinance, in whole or in part, new or existing Eligible Green Assets as outlined in its Sustainable Issuance Framework.
Scotiabank maintains a commitment to providing C$350 billion in climate-related financing by 2030. Gracian noted that the Bank has made significant progress, having allocated C$132 billion towards this goal since November 2018.1
The Mexican Green Bond follows several key Scotiabank sustainable finance initiatives in 2024:
- September – Scotiabank issued inaugural CAD Sustainability notes, the largest labelled issuance by any financial institution or corporate in the Canadian market, and the first from a major Canadian bank since 2021. The Notes are the first benchmark sustainability issuance from any major bank globally to allow for allocation of proceeds to nuclear energy2
- April – Scotiabank issued its first green bond in the European market, the largest green or sustainability bond offering by a Canadian financial or corporate at that time
- April – Scotiabank was among the first Canadian domestic systemically important bank (DSIBs) to launch a Sustainability GIC for retail and small business clients
“Our sustainable issuance program has grown over the years and provided momentum for this Green Bond launch in Mexico,” said Agnes Varatinskaite, Director, Term Funding and Capital Management, Scotiabank. “Together, these issuances demonstrate our commitment to playing a role in sustainable finance across global markets and being a trusted financial partner for our clients.”
Scotiabank’s leadership on the rise in Latin America
Scotiabank has continued to grow its presence as an advisor and lender to sustainable projects through the utilization of its balance sheet in Mexico and Latin America, resulting in a sharp rise in the region’s league tables.
In Mexico specifically, Scotiabank:
- Is the fifth largest Bank in the credit market share
- Is the sixth largest in deposits
- Holds 18.6% market share for ESG bonds, having led 17 issues, placing it among top-ranked underwriters of labelled debt capital market products3
Scotiabank - Top Underwriter of Local Bonds in Mexico3
2024 YTD ESG League Table3
MXN$ Billions
“Mexico and Latin America are now leading hubs for sustainable financing innovation and issuance, and we are ready to meet the increasing demand for products like Green Bonds,” said Gracian. “As a Bank we’re strategically positioned across the Americas, with a regional sustainable finance team that specifically covers the LatAm region, which allows us to capitalize on important synergies and drive innovation in the market.”
Scotiabank’s strong presence in Mexico is a differentiator, allowing it to serve clients across different lines of business operating in one of the world's largest free-trade zones, specifically the United States-Mexico-Canada Agreement (USMCA). With the growing nearshoring trend, the trading and commercial opportunities within the North American corridor have shown positive grown trends – underscoring the importance of Scotiabank’s presence throughout the continent.
Supporting the growing opportunities in North America, the team holds the sustainability and finance expertise to provide strong business advice and innovative solutions for sustainability challenges across many industries, geographies and sectors.
Scotiabank’s Sustainable Finance group has also been recognized with multiple awards, solidifying its position as a leading Bank for sustainable finance across the Americas. Notable accolades include Best Bank for Sustainable Financing in Emerging Markets (Global) and Best Bank for Transition/Sustainability-Linked Loans (Latin America) by Global Finance in 2024.
Mexico: a market ripe for growth and innovation
ESG-labelled bond issuance in Mexico has grown sharply. In 2023, these issuances grew over 35% year over year. Year to date, over 45% of all local bond issuances in Mexico have an ESG label.4
During 2023, the Mexican government published the Mexico Sustainable Taxonomy and the Sustainable Finance Mobilization Strategy. These initiatives continue to support the development of the sustainable finance market, paving the way for corporates and global financial firms like Scotiabank, Gracian noted.
What’s ahead for sustainable finance in Latin America
Innovations in ESG-labelled debt have also come from corporate and sovereign issuers in the region’s other markets, including Chile and Brazil, which are pioneering new sustainability financing products, including:
- Blue bonds, supporting water security and marine and ocean-based projects
- Resiliency and biodiversity bonds and loans
- New product combinations, such as green sustainability-linked loans and bonds
- New financing structures, such as sovereign sustainability-linked bonds with step-ups/step-downs5
We expect to see an increase in demand in Latin America for sustainable finance products with a social focus. The concept of a just transition reflects the need for all social groups, workers and communities to be included in the shift towards a lower carbon future, particularly as those living under the poverty line are disproportionately affected by climate change.
“We aim to be a trusted Bank wherever we operate. By continuing to grow our leadership in the region, engage collaboratively with stakeholders in local markets, and evolve our capabilities, we feel we are well positioned to deliver sustainable financing products that recognize and incentivize positive ESG performance,” says Alvarez.
For more information, please contact:
