Brazil aims to raise $2 billion in ESG sovereign bonds in September -official

FILE PHOTO: An aerial view shows trees as the sun rises at the Amazon rainforest in Manaus

By Marcela Ayres

BRASILIA (Reuters) -Brazil is set to issue around $2 billion in its first sustainable sovereign bonds in September, a senior Finance Ministry official said on Thursday.

"In the upcoming month, the world will be closely observing and acquiring our sustainable bonds," Dario Durigan, the ministry's executive secretary, said during a meeting of the committee of the country's Climate Fund.

He said green and social projects will back the bonds.

"The expectation that we have in the Nation Treasury is that we issue something around $2 billion. It is a very relevant amount, it will be able to serve as a financing base for the ecological transition plan."

During a news conference late on Thursday, Treasury Secretary Rogerio Ceron said the government could not specify the volume or date of the issuance in order to avoid impacting markets.

He added that despite efforts to "finalize all preparations by September," the postponement of the operation until early 2024 due to unforeseen circumstances would not be a problem.

At a meeting on Thursday of the National Monetary Council (CMN) - Brazil's top economic body comprising the finance minister, planning minister and central bank governor - the government defined a new framework that will govern Climate Fund operations, in line with Durigan's remarks at the Climate Fund committee meeting.

The text of the CMN framework, which comes into force in September, defines loan return rates, establishing that financing backed by the fund will seek to "support the implementation of enterprises, the technological and productive capacity development and the acquisition of machinery and related equipment mitigating greenhouse gas emissions and adapting to climate change and its effects."

In an interview with Reuters last week, Rafael Dubeux, who is coordinating efforts in the Finance Ministry's "ecological transformation" plan, disclosed that the initial allocation of Brazil's inaugural sustainable sovereign bonds will primarily benefit the Climate Fund under the oversight of the state development bank BNDES.

The bonds are part of President Luiz Inacio Lula da Silva's efforts to improve Brazil's record on the environment in a broad green plan that includes the establishment of a regulated carbon credit market.

Durigan said he held a meeting with John Graham, CEO of Canada Pension Plan Investment (CPP Investments), on Wednesday to explain Brazil's green plan and that Graham said he was determined to increase the percentage of CPP's investment in Brazil.

CPP Investments did not immediately respond to a request for comment.

(Reporting by Marcela Ayres in Brasilia; Editing by Susan Fenton and Matthew Lewis)