Green project bond of the year: CADU/IDB Invest

The use of proceeds from the first Climate Bond Initiative (CBI) certified green bond for the housing sector in Latin America will finance or refinance green housing projects that incorporate energy and water efficiency measures under Ecocasa – a sustainable social housing programme in Mexico.

CADU is a real estate company that designs, builds, promotes and sells housing projects in the affordable entry-level, middle-income and residential segments in Mexico. In June 2020, it was announced that CADU intended to issue multiple green bonds on the Mexican Stock Exchange.

In December 2020, CADU concluded the placement of its first green bond for an amount of MXN502.1 million ($24.5 million). Sustainalytics provided a favourable second party opinion stating that the projects funded by the green bond proceeds will provide positive environmental impacts and that the green bond framework aligns with the Green Bond Principles.

IDB Invest, the investment arm of the IDB Group, will also provide a five-year revolving credit facility (RCF) of up to MXN300 million, including a committed tranche of up to MXN200 million and an uncommitted tranche of up to MXN100 million, with drawdowns of up to 12 months in order to finance working capital requirements in connection to Ecocasa housing projects.

Mexico has a significant gap in adequate and affordable housing, and this shortage disproportionately affects the middle- and low-income segments. CADU has estimated that the implementation of energy efficiency measures in its houses sold between 2020 and 2025 could generate utility bill savings of more than $4.7 million for Mexican households.

Deal Highlights

Issuer:  CADU
Size:  MXN 502.1 million ($24.5 million)
Maturity: 7 years
Coupon:  9.13%
Use of Proceeds:  Green housing projects that incorporate energy and water efficiency measures
External Reviewer:  Sustainalytics, CBI
Lead Manager:  Banco Sabadell
Credit Rating:  HR A+ from HR Ratings; AA- / M from Verum
Other highlights/notable features: This is the first green bond of the housing sector in Latin America with certification under the Climate Bond Initiative (CBI) "Low Carbon Buildings" standards.