The Financial System Supervisory Authority (“ASFI”), through ASFI Circular No. 749/2022 of December 30, 2022, approved and published in the Electronic Gazette of Financial Regulation (GERF), the Modifications to the Regulation of the Registry of the Stock Market and Related Regulations (“Circular 749/2022”), regarding the guidelines for the issuance of Green Bonds, Social Bonds and Sustainable Bonds, issued by the International Capital Markets Association (ICMA) , which are recommended to promote integrity in the development of the Bond market, transparency and disclosure of information.

Based on the Principles of Green and Social Bonds, as well as the ICMA Sustainable Bonds Guide, Circular 749/2022, establishes and incorporates the definitions and concepts of “Social Bonds”, “Sustainable Bonds”, “Green Bonds” , “Social Projects”, “Sustainable Projects”, and “Green Projects”, among others:

Social Bonds:  They are fixed-income securities that represent a long-term debt obligation contracted by an issuing entity, whose resources will be exclusively used to finance or refinance new or existing projects that are eligible as Social Projects;

Sustainable Bonds:  They are fixed-income securities that represent a long-term debt obligation contracted by an issuing entity, where the resources will be exclusively used to finance or refinance a combination of Green Projects and Social Projects;

Green Bonds:  They are fixed-income securities that represent a long-term debt obligation contracted by an issuing entity, whose resources will be exclusively used to finance or refinance new or existing projects that are eligible as Green Projects;

Social Projects:  projects whose objective is to address or mitigate a specific social problem and/or try to achieve positive social results especially, but not exclusively, for a target population;

Sustainable Projects:  Those projects that seek to generate a positive impact on the well-being of a certain social group;

Green Projects:  Those projects that seek specific environmental benefits subject to evaluation and quantification;

In line with the current trend in international capital markets and in various jurisdictions, where debt instruments are issued for specific purposes, the purpose of the amendments included in Circular 749/2022 is to make registration, authorization, and trading viable. of Green Bonds, Sustainable Bonds and Social Bonds in the Bolivian Stock Market. As part of this objective, Circular 749/2022 modifies the Securities Market Registry Regulations, the Issuance Prospects Manual, the Regulations for Carrying Out External Audit Work and the Regulations for Carrying Out External Review Work, with the purpose of generating security and confidence to local and foreign investors, under the supervision and control of ASFI.

Among the principles for the issuance of Green Bonds, Sustainable Bonds and Social Bonds, it is possible to highlight the obligation to indicate the destination of the funds, forcing them to be used in projects that generate clear and specific environmental and/or social benefits, and must be described in detail and quantified by the issuer, according to the following:

• The categories of eligible green, social and/or sustainable projects to which the funds will be allocated;
• The refinancing of specific projects to which the resources have been assigned;
• The environmental and/or social benefits and impacts of the projects.

The issuance of Green, Social and/or Sustainable Bonds must be exclusively used to finance the following types of projects:

• Renewable energy;
• Energy efficiency;
• Pollution prevention and control;
• Sustainable management of natural resources and land use;
• Biodiversity Conservation;
• clean transportation
• Sustainable management of water and wastewater;
• Adaptation to climate change;
• Products adapted to the ecological and circular economy;
• Technologies and production processes.

Likewise, the following social activities will be considered:

• Basic services infrastructure;
• Access to basic services;
• affordable housing;
• Employment generation;
• Food safety;
• Socioeconomic advances and empowerment.

All the funds from the issuance of Green Bonds, Social Bonds and/or Sustainable Bonds must be used exclusively to finance or refinance new or existing green projects or social projects and the financing may be partial or total with respect to the resource requirement of each project.

For more information contact:

Carla Arellano  | Counselor Ferrere | carellano@ferrere.com