Investing in a Greener Future: Successful Debut of the Green Bond in the Dominican Republic

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View from Ozama River and Santo Domingo's cable car, in the Dominican Republic View of the Ozama River and the Santo Domingo cable car in the Dominican Republic. Photo: Orlando Barría for the World Bank

The Dominican Republic is highly committed to improving its capacity to mitigate and adapt to climate change. On June 25, 2024, the country issued its first sovereign green bond in international markets. With a 12-year maturity and an annual coupon of 6.6%, the financing cost was 15 basis points lower compared to conventional bonds. The transaction was six times oversubscribed, raising USD 750 million.

Why are Green Bonds Important for the Dominican Republic?

In a context of budget constraints, mobilizing private and foreign financing is crucial to meet commitments and goals in sustainable development and climate change. These include implementing the 2030 Agenda for Sustainable Development Goals (SDGs) and the commitment to reduce greenhouse gas (GHG) emissions by 27% by 2030, as reflected in the Nationally Determined Contribution (NDC) under the Paris Agreement.

With support from the World Bank, the Dominican Republic's government laid the foundation for sustainable financing of public projects and programs with a high environmental impact. This was an innovative and competitive process, as several countries worldwide are moving to attract the same investment. Recent examples include Romania, Brazil, Chile, and Colombia. To be successful, this process required rigorous work adhering to international best practices to demonstrate the competitive advantages of the Dominican green proposal.

An Ambitious Green Financing Proposal

The government identified a portfolio of projects and programs aligned with sustainability criteria and contributing to climate change mitigation and adaptation. Among the most important projects and programs to be financed by this first green bond are:

  • Clean urban public transport with no direct emissions, including the construction and expansion of infrastructure for the Santiago Monorail, cable cars in Santiago and Santo Domingo, and the Santo Domingo Metro;
  • Tax incentives for the development and implementation of renewable energy generation projects, particularly solar photovoltaic, wind, and hydroelectric power;
  • Efficient and resilient water and wastewater management, including the construction and improvement of sanitation, drainage, and risk systems, as well as sanitary sewerage; and
  • Climate-resilient and efficient management of natural resources, as well as the conservation of protected marine areas in line with the provisions of the "Dominican Republic 30x30 Program," which aims to conserve and manage 30% of the land and marine surface under protected areas to ensure biodiversity, preserve natural resources, and mitigate climate change impacts.

These projects and programs are part of a broader portfolio of USD 1.6 billion in investment needs for high environmental impact projects between 2022-2025. The identified projects will not only ensure a greener future for the country but also improve the daily lives of Dominicans.

A Robust Framework with Independent Evaluation

The Green, Social, and Sustainable Bond Framework encapsulates the country's proposal to attract the attention of foreign investors in line with the Principles of the International Capital Market Association (ICMA). The framework offers high standards of transparency, solid governance foundations, and clear eligibility and expenditure reporting criteria. Standard & Poor's Global independently evaluated the framework and awarded high ratings for the quality of eligible expenditure proposals and their level of ambition and innovation. This outstanding rating in the region increased the proposal's credibility with investors. Beyond this, the government also integrated sustainability into its public debt strategy for 2024-2028.

Inclusive Inter-Institutional Governance

The government also had to demonstrate to the world its capacity to bring together all key institutional actors to present a cohesive commitment to the green agenda. The governance of this initiative was supported by a presidential decree establishing the creation of a Thematic Bonds Commission. This Commission, chaired by the Ministry of Finance and composed of key government institutions (including the Ministry of Environment and Natural Resources and the Ministry of Economy, Planning, and Development), enhances inter-institutional coordination and guides the government on the most appropriate actions concerning green and social financing needs. The Commission created opportunities for all institutions to share their voice and contribute to both the development of the bond framework and the identification of a portfolio of eligible expenditures and priority investments.

The program's success demonstrates the Dominican Republic's commitment to climate change and its determination to effectively mobilize private financing for the transition to a green and resilient economy, thus creating new and better opportunities for future generations. Moreover, it lays the technical and institutional foundations to promote the country's green and sustainable financing.


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María José Martínez

Vice Minister of Public Credit, Dominican Republic

Yira Mascaró

Practice Manager, Finance Competitiveness and Innovation for Latin America and Caribbean Region

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