Government will issue ‘green’ bonds abroad to finance deforestation control, says Treasury

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Government launched the rules for issuing sustainable sovereign bonds, that is, destined for the foreign market. With the resources, it will finance projects aimed at the environment. In recent years, the Amazon has faced a tough period of deforestation and fires GETTY IMAGES The National Treasury Secretariat announced this Tuesday (5) the Brazilian “framework” for sustainable sovereign bonds, that is, the rules for issuing government bonds in the market external funds destined to finance projects focused on the environment. Among the norms, it is defined that the funds raised from international investors, through these public bonds, must necessarily be directed towards environmental projects. Such as: environmental preservation of native biomes, including the control of deforestation in the Amazon and Cerrado, promotion of the Climate Fund, production of renewable energy, energy efficiency and sustainable management of natural resources. The government claims that there will be “transparency in the definition and selection of expenses” to be paid for with these resources. And it also says that it will “disseminate qualitative and quantitative indicators, when available, with measurement of the environmental and/or social impacts of these expenses”. “The initiative reaffirms Brazil’s commitment to sustainable policies, aligning itself with the growing interest of non-resident investors and with the expansion of the thematic bond market in the world”, informed the National Treasury. According to the Ministry of Finance, the rules for issuing green bonds by the government were drawn up by the Sovereign Sustainable Finance Committee, with the support of the Inter-American Development Bank (IDB) and the World Bank (Bird). “The disclosure of the Brazilian Framework for Sustainable Bonds marks a significant step in Brazil’s national finances and offers a unique opportunity to global investors. This advance makes it possible to raise funds for policies that genuinely promote sustainable and inclusive development,” said the representative of the IDB in Brazil, Morgan Doyle. The Director for Brazil at the World Bank, Johannes Zutt, assessed that the Brazilian government’s new rules for issuing sustainable bonds demonstrate Brazil’s commitment to facing environmental and social challenges. Deforestation and environmental problems affect the preservation of the Maranhão Amazon How issues in the foreign market work Investors who buy these public debt papers pay in dollars, euros, or even in reais, depending on the currency chosen by the National Treasury. On the date of the so-called redemption, they receive back the amount paid to the Brazilian government. In addition, Brazil pays interest to these investors every six months or a year, depending on the contract. Launching bonds on the foreign market works like an auction: investors make their proposals for the interest rate and quantity of bonds they wish to receive, and the Treasury decides whether to accept them. Offers are made to banks hired by the National Treasury to lead the operation.

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