The Federal Government of Mexico issued a Sovereign SDG Bond.
it is unique due to its geospatial and governance criteria and its use of the SDGs as an eligibility entry point.
Mexico's approach could be duplicated by other countries that have similar institutional capacity, budget mapping against the SDGs, and sub-national data.
The Federal Government of Mexico issued a Sovereign SDG Bond, the first country to do so. The bond features two eligibility criteria: a geospatial criterion that prioritizes vulnerable populations; and a governance criterion linked to the involvement of a UN organization. The bond is also the first to use the SDGs as an entry point, not only in ex-post mapping, according to the investment bank that helped Mexico design the bond.
Mexico’s Ministry of Finance and Public Credit announced the initiative on 15 September 2020 as part of its sustainable financing program and the first part of a recurring finance tool. It is a seven-year bond for USD 890 million to be used through a “SDG localized finance” approach.
Natixis indicates that Mexico’s approach to a sovereign SDG bond could be duplicated by other countries, but “requires a strong bedrock” in three areas: institutional capacity, budget mapping against the SDGs, and sub-national data to inform the geospatial eligibility criterion.
On the geospatial eligibility, Natixis reports that the SDG bond issuances will finance projects located in 1,345 municipalities in Mexico selected because of illiteracy rates, school attendance rates, level of health services deprivation, lack of toilets, drainage or piped water in houses, absence of electricity access or basic equipment such as refrigerators. The geospatial eligibility is based on “very granular open data.”
On the governance eligibility, Natixis explains that the main governance innovation in the bond framework is the involvement of the UN Development Programme (UNDP), which had worked with Mexico on its SDG budget mapping.
In UNDP’s press release about the bond, Administrator Achim Steiner expressed hope that other countries will soon follow Mexico by establishing their own sovereign SDG bonds. [SDG Sovereign Bond Framework]