Environmental Finance's Bond Awards 2021

Social bond of the year - sovereign: Republic of Guatemala

Hugo TriacaCentral America and the Caribbean's first social bond aims, in its second tranche, to finance social projects related to Guatemala's Covid-19 prevention, containment and mitigation efforts.

The $1.2 billion bond is split into two tranches, the first $700 million aggregate principal amount of additional 6.125% are due in 2050 and will be used for general budgetary purposes. The second social tranche of $500 million with aggregate principal amount of 5.375% are due in 2032 and will target social projects related to Covid-19.

The country believes that proceeds from the social bond tranche will address the UN's Sustainable Development Goals for zero hunger, good health and wellbeing, and quality education.

One of the Environmental Finance Bond Award judges praised its broad impact categories and detailed impact reporting, while noting it could be a template transaction for other emerging market sovereigns.

A second judge agreed that as the first sovereign bond of its kind in the region it may attract other issuers. In addition, the bond is the first from Latin America without guarantee from multilateral organisations.

"We are delighted to be recognised for this prestigious award – a ground-breaking transaction in so many ways. We are proud to have worked collaboratively with the Bank of America ESG and debt capital markets teams to assist the Republic of Guatemala on this novel transaction, making it the first Latin American country to include Covid-19 response efforts, among other eligible social projects, in the use of the proceeds of a sovereign social bond issuance," said Hugo Triaca, partner at Clifford Chance, who provided representation to BofA as global coordinator, sole bookrunner and social bond structuring agent on the issuance.

Deal Highlights

Issuer: Republic of Guatemala
Size: $500 million
Maturity: 24 April 2032
Coupon: 5.375%
Use of Proceeds: Covid-19 response
Lead Managers: Bank of America
Credit rating: Fitch country rating BB- (stable)