Morales & Besa advised the Republic of Chile in its first green sovereign bond issuance in EU

July 2, 2019

Morales & Besa acted as special Chilean counsel to the Republic of Chile, represented by the Ministry of Finance, in connection with a global offering of a sovereign bond due 2031 with a principal amount of EUR $ 861,000,000 and a 0,830% coupon.  Crédit Agricole CIB, J.P. Morgan y Société Générale Corporate & Investment Banking acted as underwriters for the EUR denominated sovereign bond issuance.

The bond offering was made by means of a Prospectus Supplement and an accompanying Base Prospectus under Chile’s registration statements filed with the United States Securities and Exchange Commission under registration number 333-222495.

With respect to the use of the proceeds, Chile utilised to fund general governmental purposes.

This transaction was one of the world’s first issuances of sovereign green bonds and, together with the USD 1,418,357,000 global bond closed on June 25, 2019, is the first one of its kind in Latin America. The Republic of Chile declared its intention to invest an amount equal to the proceeds from the sale of the notes into projects that may qualify as “eligible green expenditures” under the Green Bond Framework.  Eligible green expenditures may include tax expenditures (subsidies and tax exemptions), operational expenditures, investments in real assets and maintenance costs for public infrastructure, intangible assets and capital transfers to public or private entities, in one or more of the following categories: clean transportation, energy efficiency, renewable energy, living natural resources, land use and marine protected areas, water management and green buildings.

The Green Bond Framework was evaluated positively by Vigeo Eiris, an international independent agency, and the project portfolio associated with the issuance of the bonds was certified by the Climate Bond Initiative, which is an international organization that examines bonds against green issuance standards.

Apart from the innovative aspect characterising these issued financial instruments, the international financial markets rewarded Chile with exceptionally low rates considering the current global financial turbulence and the lowest in history for Chile.

The Morales & Besa’s team that participated in this operation was led by partner Guillermo Morales along with senior associate Jaime Rosso (tax),  associates Francisca Bannura (environment) and Mariana Schnettler (capital markets), and foreign associate, Beatrice Russo (capital markets).