The Argentine subsidiary of the risk rating agency Moody’s has published a report in which it analyzes trends and opportunities in the local sustainable debt market.

Placements of social, green, sustainable and sustainability-linked emissions (SVS and VS by its initials in Spanish) amounted to nearly 1.02 billion dollars in year 2023, through 17 issuers. Although it has marked a strong growth since its inception in year 2019, sustainable instruments still represent only 6.7% of the total local debt market, with moderate growth potential. Regulations play a key role for market development, for example the General Resolution 963/2023, which incorporates new types of negotiable securities such as: i) Gender Bonds; ii) Blue Bonds; iii) Orange Bonds; and iv) Transition Bonds.

Renewable energy companies are the main issuers of sustainable instruments in the local market, due to the natural alignment of their business model with the United Nations Sustainable Development Goals (SDGs), in particular with SDG 7 (Affordable and Clean Energy) and SDG 13 (Climate Action). However, in recent years there has been a trend towards greater sector diversification, mainly by the rise of agriculture, sovereign/sub-sovereign and civil associations sectors. Negotiable Obligations are the main type of instrument used in the local market, followed by Public Securities, Treasury Bills, Financial Trusts and Closed-End Common Investment Funds. The local mutual fund industry is still in an early stage and represented less than 1% of the industry’s assets under management by the end of April 2024.

The authors also highlight the opportunities for sustainable financing from the use of technology for monitoring metrics (KPIs), such as blockchain technology, which allows real-time monitoring, correcting deviations and guaranteeing the transparency and veracity of the information. This is especially relevant for companies that are transitioning to more sustainable business models, by guaranteeing the traceability of their value chain and compliance with their sustainability objectives.