By Marcela Ayres
SAO PAULO (Reuters) -The Inter-American Development Bank (IDB) has raised $100 million with its first Amazonia Bond to tackle deforestation and boost support for local communities, and other countries are expected to follow suit soon, its chief told Reuters.
The five-year note will pay an annual coupon of 3.802%.
IDB President Ilan Goldfajn said the operation marks the beginning of a plan to issue up to $1 billion of the bonds “over time,” adding that Brazil’s government had told them it plans to issue similar bonds under the same framework, developed by the IDB in partnership with the World Bank.
Brazil’s Treasury, which issued its first sovereign sustainable bond in 2023 under a self-developed framework, said there are “studies underway” evaluating the issuance of Amazonia Bonds.
Brazil, Colombia and Peru are among the countries working to safeguard more than 6 million square kilometers (2.3 million square miles) of Amazon rainforest, a region that hosts over 10% of the planet’s known species.
The issuance is part of a package of IDB initiatives to boost sustainable finance ahead of next week’s COP30 climate summit, Goldfajn said.
Roughly half of the amount, about $3 billion, will go to a currency-hedging facility offered to Brazil under a derivatives contract with the central bank, which will in turn extend the service to local banks.
Announced last year as part of Eco Invest – a Brazilian government program to attract foreign capital to long-term sustainable projects – the currency-hedging had taken time to overcome technical hurdles, Goldfajn said.
The ISDA agreement is now scheduled to be signed next week and will see the IDB’s triple-A credit rating used to provide longer-term, lower-cost hedging options against swings in the local currency.
The Brazilian real, which lost more than 20% in 2024, has already gained over 13% so far this year.
As part of its COP30 announcements, the Lula government is expected to unveil a fourth Eco Invest auction, now targeting Amazon bioeconomy ventures and nature-based tourism infrastructure.
The IDB will also look to expand access to finance for regional cities through its Amazonia Forever program so they can improve resilience to floods, droughts and wildfires, Goldfajn said.
The project was developed with Nordic partners who provided guarantees to enable lending, he added, without giving details.
“When you talk about the Amazon abroad, people think only of the forest,” he said. “For years that narrow view centered on deforestation. That’s changing. Our approach is holistic, if we support people with jobs, income and sustainable living conditions, they can live peacefully within the forest.”
(Reporting by Marcela Ayres; Editing by Alexandra Hudson)
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