Shearman And Sterling

News February 24, 2021

Shearman at the Forefront of the Green Capital Markets Revolution

Shearman & Sterling has helped the Central American Bank for Economic Integration (CABEI) become a regional leader in environmental, social and governance (ESG) and Green bond offerings. Since 2019, the firm has played a leading role in this emerging financing trend, not only advising CABEI, but also playing an important role in offerings by sovereigns and corporates.

Working with CABEI

In 2019, Shearman & Sterling represented CABEI in connection with its inaugural green bond offering of $375 million of floating rate notes due 2024. 

Later, in response to the COVID-19 pandemic, CABEI issued the first of two COVID-19 Vaccine Bond Offerings to fund loans to its member countries to help them assist in the implementation of immunization campaigns. 

Also, in 2020, Shearman & Sterling represented the bank on its $750 million notes offering. This represented the largest deal in CABEI’s history and its return to the 144A market after eight years.

In February, CABEI issued its first Social Bond, in which $500 million in proceeds will be used for eligible social projects, including the development of healthcare institutions, the improvement of educational and vocational training infrastructure, financing for micro, small and medium enterprises and the promotion of gender inclusion. CABEI’s Social Bond Framework received a second party opinion from Sustainalytics. 

“We are proud to provide legal advice to CABEI in these innovative transactions that will undoubtedly help improve the lives of many people across Central America,” said Shearman & Sterling partner Grissel Mercado. “In these trying times, we are thrilled to be able to contribute to the modernization of critical social infrastructure and improve access to resources.” 

CABEI is an international, multilateral development financial institution. Its resources are continuously invested in projects that foster development to reduce poverty and inequality; strengthen regional integration and the competitive insertion of its member countries in the global economy; providing special attention to environmental sustainability.

Pioneering ESG and Green Bond Offerings 

 Shearman & Sterling’s Capital Markets practice has played an important role in facilitating ESG and Green bonds all over Latin America and in the U.S. As a leader in Latin American capital markets transactions, we have worked on some of the region’s most important green bonds, including green bonds issued by the Republic of Chile, Banco Nacional de Costa Rica and Nacional Financiera S.A.

The demand and offer of ESG and Green bonds are only bound to increase, especially as local regulators continue to provide guidance and rules regarding ESG and Green investing, and as international organizations establish harmonized frameworks that will inform best practices regarding ESG and Green financing.

“At Shearman & Sterling, we are committed to remaining at the forefront of ESG product developments. From the mature green bond market to the rapid rise of social bonds, clients turn to us when navigating the new world of sustainability-linked financing,” said Robert Giannattasio, a senior associate in the law firm’s Capital Markets practice.

The Team