IDB Invest, a member of the IDB Group, has subscribed to a social bond issued by La Hipotecaria Compañía de Financiamiento S.A. (La Hipotecaria), for 52 billion Colombian pesos with a term of five years, including a two-year grace period. This is the first time a private financial entity has issued a social bond in Colombia.
IDB Invest acquired the social bond in its entirety. The proceeds from the placement of the bond will be used to finance social interest housing and social priority housing in order to support the Colombian government’s housing policy objective of building 520,000 social interest homes. According to the National Statistics Administrative Department (Departamento Administrativo Nacional de Estadística, DANE), the country has a housing deficit of 36.6% in terms of mortgage depth.
Given the global economic uncertainty as a result of the Covid-19 pandemic, in addition to financing the social portfolio for mortgages of this type, the issue will also allow use of up to 5% of the proceeds from the bond to cover reductions in La Hipotecaria’s cash flow as a result of payment deferments for its clients in these segments.
As part of the bond issuing process, IDB Invest supported La Hipotecaria in the design of a methodological framework for selecting, monitoring, and evaluating social interest and priority interest housing projects.
This operation could contribute to three United Nations Sustainable Development Goals (SDGs): End poverty (SDG 1), decent work and economic growth (SDG 8), and sustainable cities and communities (SDG 11).
Additionally, in line with international best practices, IDB Invest offered technical assistance for hiring a specialized company that issued an independent opinion—known as a second party opinion—on the methodological framework and sustainability credentials, as well as responsible management of the proceeds from the issue.
About IDB Invest
IDB Invest, a member of the IDB Group, is a multilateral development bank committed to promoting the economic development of its member countries in Latin America and the Caribbean through the private sector. IDB Invest finances sustainable enterprises and projects to help secure financial outcomes and maximize the region’s economic, social, and environmental development. With a portfolio of US$12.088 billion in assets under management and 333 clients across 24 countries, IDB Invest provides innovative financial solutions and advisory services that meet the needs of its clients in a variety of sectors.
On Grupo La Hipotecaria
Grupo La Hipotecaria has more than 15 years of experience in mortgage financing, sound credit evaluation policies, and an excellent track record in capital markets, with more than 12 securitizations and a covered bonds program. Its business model in Central America of creating mortgage-backed securities is groundbreaking and has had a significant positive effect on local securities markets in Panama and El Salvador. As part of its growth strategy, the Group entered the Colombian market in 2011 through an unregulated enterprise called La Hipotecaria de Colombia S.A.. In 2014, it became a credit institution specializing in mortgage lending, licensed and supervised by the Financial Superintendency of Colombia (Superintendencia Financiera de Colombia, SFC), through a company called La Hipotecaria de Financiamiento, S.A. Grupo La Hipotecaria is known for providing personalized and flexible advisory services, enabling it to form strong bonds of trust with its clients, which gives it a robust competitive advantage in terms of service over its competitors.
Ana Lucía Escudero
This post is also available in: Spanish