Latin America has become the leading region in gender bonds, a promising financing vehicle for institutions committed to addressing and reducing gender inequality by improving women’s economic empowerment and financial inclusion.
Gender lens investing has proven to be both profitable and socially responsible, contributing to closing the gender gap while providing positive investment returns and improving bottom lines. The GLI Forum LatAm 2023 focused on the enormous potential of gender lens investing, including innovative mechanisms like gender bonds, which now represent 17.6% of all fixed-income securities with a gender lens in Latin America (IDB).
To provide an in-depth perspective on this mechanism, Pro Mujer brought subject-matter experts together on the main stage as part of the panel “Breaking Barriers: Gender Bonds in Latin America.” Moderated by Gema Sacristan, an expert in impact and gender investment, and featuring Alejandra Díaz, Director of Sustainability at Banco Davivienda; Elizabeth Eras of Jardin Azuayo; and María Laura Tinelli, Director of Strategic Business Development at Pro Mujer, the session featured discussions on each participant’s perspectives, experiences, and challenges for the future.
“Gender bonds are undoubtedly one of the most effective innovations from the past few years in terms of closing the gender gap,” said Gema Sacristán. In 2019, IDB Invest and Banistmo, a subsidiary of the Bancolombia Group in Panama, issued the first gender bond in Latin America. The transaction raised $50 million to finance women-led SMEs. This first bond marked a milestone, leading the way for the gender bond issues that followed in the region.
In Colombia, Banco Davivienda has positioned itself as a leader and pioneer in the sector, issuing the second gender bond in Latin America. The deal, worth $100 million, or COP362,500 million, has a 7-year maturity, and proceeds will be exclusively used by the issuer to support women entrepreneurs and facilitate women’s access to public housing.
During the panel session, Alejandra Díaz, Director of Sustainability at Banco Davivienda, emphasized the organization’s commitment to closing the financing gap for women, highlighting the discouraging situation in Colombia.
“Women’s access to financial services is seven percentage points below men’s,” she said. “Looking at numbers from the first quarter, men received 800,000 more loans than women, representing close to 600 billion pesos. And interest rates tend to be higher for women, despite the risk being lower. If we focus on home loans, there is still an 11% gap, with men receiving an average disbursement of 128 million pesos versus 110 million pesos for women.”
Over the years, 6 million Colombian men and women have been able to access housing thanks to the solutions offered by Davivienda. During the term of the gender bond, nearly 350 billion pesos were disbursed, benefiting 7,000 women.
Another success story shared during the panel session was that of the Jardín Azuayo Savings and Credit Cooperative in Ecuador, which issued a US$20 million diversity and inclusion bond, the first of its kind in the world. Jardín Azuayo will use the resources to finance and expand access to credit for micro, small, and medium-sized enterprises owned and/or led by women, people with low incomes, with a low level of education, ethnic groups, and/or migrants in Ecuador. The issuer also benefited from advisory services and a monetary bonus subject to the fulfillment of objectives.
Pro Mujer was proud to join these pioneering organizations this year following the issue of its first two gender bonds in Argentina. In early 2023, Pro Mujer Argentina used the capital markets to raise funds to exclusively finance the Pro Mujer Servicios Financieros portfolio. Worth $200 million Argentine pesos, the bond is backed by the country’s leading banks and has a 12-month maturity period. It is the first gender bond issued in Argentina. The bond has impacted more than 1,500 low-income women who own MSMEs.
Given the overwhelming success of the first issue, Pro Mujer launched its second gender bond via the Argentine stock exchange. The bond raised a total of AR$370,000,000, and proceeds were used to provide loans to more than 2,000 women. This second issuance marks a highly positive trend. Not only did Pro Mujer surpass its issue target, but the investor pool was more extensive and increasingly diversified, highlighting the growing interest in products that combine traceable social impact and competitive market returns.
“We were surprised to see that there were three times as many individuals, people like you or me, who came forward and wanted to invest in the gender bond,” said María Laura Tinelli. “The traceable impact of these bonds is extremely attractive and palatable for the market. Now the next step is to be able to use these financing mechanisms in other countries, like El Salvador or Bolivia.”
The evidence is irrefutable, and more leaders in the investment world are highlighting the importance of gender lens investing. Gema Sacristán closed the talk by sharing her hopes for the future: “So far, gender bonds in Latin America have focused on a single approach. We still need to target women in leadership positions, value chains, and companies making products or providing access to services that improve women’s lives.”
The hope is that this instrument will continue to spread throughout the region to impact the lives of even more people.
