Capital Markets Solutions for Urban Resiliency

Overview
Capital Market Solutions for Urban Resiliency aims to drive critical investment to climate resilience infrastructure in cities in Latin America. It is a bond mechanism that pools small cities and municipalities to finance climate resilient projects, strengthen urban resilience planning and diversify their investor base.

The Problem
Climate-resilience infrastructure in cities is critical to countries achieving both climate and sustainable development goals. However, not enough money is flowing to resilience infrastructure. Emerging market cities have a particularly difficult time raising money for resilience infrastructure.

The Solution
Capital Markets Solutions for Urban Resiliency is an enabling tool to increase and diversity investment sources for climate resilience infrastructure projects in emerging market cities. It is a bond mechanism that pools multiple cities into a single issuing entity, a SPV, that would fund green projects. This would allow smaller municipalities to access the capital markets and help develop standardized taxonomies and methodologies for the allocation of budgets to green projects, leading to faster replication. It supports emerging market local governments to access capital markets and attract institutional investors for resilient urban infrastructure where market conditions prove challenging.

Target Impact
The proponent, Inter-American Development Bank, is targeting a pilot of three municipalities in Mexico, which will mobilize $200 million in finance. There is potential to scale to 168 other municipalities in Latin America, and shrink the $15 trillion sustainable infrastructure finance gap with significant investor interest and market opportunity.