Brazilian Government Releases Second Pre-Issuance Report for Sustainable Sovereign Bonds

The Brazilian government announces the publication of the second Pre-Issuance Report with Indicative Allocation of Resources, within the context of the Brazilian Framework for Sustainable Sovereign Bonds. This document, approved by the Sovereign Sustainable Finance Committee (CFSS), outlines the expense categories that will serve as a reference for the second issuance of sustainable public bonds by the Federative Republic of Brazil.

The new report defines that 50% to 60% of the resources from the upcoming issuance will be allocated to environmental expenses and 40% to 50% to social expenses, similar to what was established for the first sustainable sovereign public bond, launched in 2023 by the National Treasury. To forecast this indicative allocation, the CFSS considered eligible budget programs according to the Framework, taking into account the 2024 General Budget of the Union and future estimates. In the environmental area, expectations of loan disbursements from the National Climate Change Fund (FNMC) were included.

The mentioned composition is indicative and may vary depending on the final amount raised through the sovereign public bond. However, the lower limit for environmental expenses in the resource allocation of the issuance should be considered a floor.

The practice of pre-issuance disclosure is innovative and adheres to international best practices, ensuring the necessary transparency and detail for investors in the issuance of sustainable public bonds. This initiative reaffirms Brazil's commitment to sustainability and transparency, positioning the country at the forefront of global sustainable finance.