Publishing and trading “thematic bonds”, which are identified by colors and also by their goals – green, blue, purple, social, sustainable – gain traction through the stock exchanges in Quito and Guayaquil. From 2019 to now 2023, they negotiated 479.25 million dollars in five types of bonds: $431 million on the Quito Stock Exchange and $48.25 million on the Guayaquil Stock Exchange. The best year for theme bonds was 2022 with $285 million negotiated, or more than half of the total negotiated; Meanwhile, there was no activity in this field in 2021.

The paper issuers, who at the same time receive funds from investors interested in these issues, were banks such as Pichincha, Produbanco, Internacional, Guayaquil, Solidario, savings and credit cooperative Chibuleo, as well as the company Productora Cartonera.

“With themed bonds, issuers can access investors with a social focus who would not have access to standard bonds. It is a window into new financing opportunities with a purpose that definitely improves your reputation in the business world.” explains Ricardo Rivadeneira, president of the Stock Exchange in Guayaquil, an entity that has engaged in this type of business since 2022 and which has only reached the amount of 48.25 million dollars.

Meanwhile, the Quito stock exchange, which has been conducting this type of operation since 2019, mentions lthe first issue of thematic bonds in Ecuador, consisting of the issuance of green bonds by Banco Pichincha CA, in the amount of up to 250 million dollars, whose destination was 100% financing of business and projects with benefits for the environment and climate.

Additionally, we can highlight the first number a Blue bond in Ecuador Banco Internacional SA 2022, in the amount of up to 79 million dollars, whose destination was 100% financing of operations and projects aimed at the sustainable use of ocean resources for economic development.

In the case of Chibuleo Cooperative, the first issue of gender or purple bonds took place in September 2022. Vinicio Masabandatreasurer Chibuleo Cooperative at that timeshe emphasized that it was a challenge to make this big project for women and that it will take place in four phases.

The Chibuleo Savings and Credit Cooperative was the first entity of the national and solidarity economy to issue a Roda bond. Photo: Cooperative Chibuleo

The funds obtained from these bonds must be used in their entirety exclusively for financing or refinancing projects that are friendly to the environment, water and vulnerable sectors and contribute to compliance with Sustainable Development Goals (SDGs) of the United Nations.

Issuing financial entities (banks and cooperatives) that receive this type of financing in turn deliver loans to companies that want to promote environmental or social projects. In addition, according to the Guayaquil Stock Exchange, companies can place their own thematic bonds on the stock exchange and thus negotiate them without intermediaries.

An additional advantage of this type of funds is that issuers strengthen their image positioning due to the environmental and social obligations they acquire. They also create a positive effect on your business environment.

Both The Stock Exchanges in Quito and the Stock Exchange in Guayaquil agree that the interest of the real sector to be financed through this type of paper in 2023 is growing.

What types of bonds exist and are traded in the country?

green: They raise capital for projects with environmental benefits. For example, the purchase of a fleet of electric vehicles for company operations or the implementation of a system of renewable energy sources.

blue: They pool resources for water-related projects that have positive environmental, economic and climate benefits. For example, initiatives to preserve the sea, city or community rivers.

Purple or rhododendron: They receive funds for projects that promote the inclusion of women and access to opportunities under equal conditions. For example, employment programs for women survivors of gender-based violence with flexible policies for their reintegration into the labor market.

Social networks: They raise capital for projects with social benefits. For example, educational programs or food safety.

Sustainable: They raise capital for projects that combine environmental and social benefits. That is, initiatives that contain a green and social component at the same time.

According to the Quito Stock Exchange, The world standard for these funds – and thus bonds – to be considered green, social and sustainable consists of the guidelines of the International Capital Markets Association (ICMA) contained in the Green Bond Principles, the Social Bond Principles and the Guide to Sustainable Bonds. These principles are the use of funds, the process of evaluation and selection of projects, management of funds and reporting. In addition, ICMA makes it a key recommendation for issuers to designate an external review provider to assess program compliance.

What are the steps for issuing a thematic bond?

Issuance of the thematic bond follows the regular process of issuing long-term obligations on the Stock Exchange, with the specific purpose of said funds. This is:

The trend of thematic bonds is positioned globally. According to estimates from Bloomberg Intelligence, by 2025 environmental, social and governance assets will reach $53 trillion. According to IDB Invest, Latin America and the Caribbean show high levels of sustainable investment opportunities as they offer project diversification with attractive returns.