Green bond of the year, sovereign - Republic of Chile

Channels: Green Bonds

The Republic of Chile issued a €861 million ($950 million) of 12-year green bonds in June 2019, becoming the first ever sovereign Euro green bond issuer in the Americas.

The €861 million tranche was part of a $2.5 billion equivalent issuance from the Ministry of Finance.

Chile was the first sovereign in the Americas to create a green bond framework and issue green bonds in US dollars and euros. With a coupon of 0.83%, Chile printed its lowest-ever coupon.

The transaction has been structured according to second opinion from Vigeo Eiris and a certification from Climate Bonds Initiative (CBI) – making Chile the second country in the world to obtain CBI certification for its sovereign issuance.

Chile achieved a strong diversification of its investor base – 64 new accounts announced by the Minister of Finance, which were mainly environmental, social and governance (ESG)-type and from Europe.

Chile's green bond programme is part of a broad strategy supporting its commitment to addressing the effects of climate change. Chile drafted a green bond framework, which included eligible green expenditures dedicated to clean transportation; energy efficiency; renewable energy; living natural resources, land use and marine protected areas; water management; and green buildings.

Deal highlights:

Issuer: Republic of Chile
Date of issue: June 2019
Size: €861 million ($950 million)
Maturity: 2031
Coupon: 0.83%
Use of proceeds: Projects related to metro lines, electromobility, installation of solar panels, sustainable buildings and water monitoring systems.
External review: Vigeo Eiris
Lead managers: Crédit Agricole CIB
Other highlights/notable features: Chile is the first-ever Americas sovereign to create a green bond framework and issue green bonds in US dollars and euros

The final orderbook stood at €2.7 billion across 139 accounts with a group of well-diversified investors and a large number of new sub-sovereign, supranational and agency (SSA) and ESG investors for Chile.

The Chilean government made publicly available the full list, description and environmental benefits of the projects to be financed with the proceeds. The list entails projects related to metro lines, electromobility, installation of solar panels, sustainable buildings and water monitoring systems.

The green bonds will contribute to the achievement of specific targets, including reducing its CO₂ emissions by 30% by 2030.
Judges said as this was the first Americas sovereign green bond issued in US dollars and euros, it is expected to spread to other countries in the Americas.

Andrés Pérez, head of international finance at Ministry of Finance in Chile, said: "On behalf of the Republic of Chile, we are honored to be awarded Environmental Finance's Green Bond of Year (Sovereign).

"Our inaugural issuances reflect Chile's firm commitment on climate action and our interest in developing the green asset class. As the first sovereign to issue green bonds in the Americas, we look forward to continue breaking new ground in this growing landscape."

Nathalie Sarel, sustainable banking at Crédit Agricole CIB, added: "We are very honoured to have accompanied the Republic of Chile in the structuring process of the green bond framework and in this landmark inaugural transaction. The fantastic interest from green and ESG investors is a strong message that Chile's green bond programme can support the broad strategy to addressing climate change challenge."