IDB Invest, U.S. International Development Finance Corporation (DFC) and FinDev Canada provided subordinated loans totaling $390 million, a 10-year tenor deal, to Banco Davivienda S.A. (Davivienda). The funds from these loans will be used to provide new financing for working capital, capital investment and fixed assets to Davivienda clients in the SME and women-led SME portfolios.
The loan also includes a tranche of blended financing from the Canadian Climate Fund for the Private Sector in Latin America and the Caribbean, Phase II (C2F), which is managed by IDB Invest, for $20 million with a tenor of 7 years. The resources of this will be used to promote environmentally friendly businesses. Davivienda will see a reduction in the interest paid once it achieves the goals and milestones related to the green portfolio and risks.
Additionally, IDB Invest will support Davivienda with advisory services to develop a roadmap to increase its green portfolio. This advice will promote not only the financing of low-carbon economic activities but will also strengthen the bank’s operational and financial resilience in the face of climate change.
This operation potentially contributes to six United Nations Sustainable Development Goals (SDGs). The deal exemplifies the good working relationship between IDB Invest and Davivienda that began last year with the world’s first issuance of a gender-linked bond based on achieving outcomes.