Morales & Besa advises The Republic of Chile represented by the Ministry of Finance of Chile

January 24, 2017

Morales & Besa successfully advised the Republic of Chile represented by the Ministry of Finance in connection with a Chilean pesos (“Ps.”) 1,000,000,000,000 aggregate principal amount of 4.5% Bonds due 2021: the bonds issued by the Republic of Chile were placed in a global offering that involved Ps. 839,000,000,000 aggregate principal amount of Bonds that were publicly offered in the Chilean market and the sale of Ps. 161,000,000,000 aggregate principal amount of Bonds purchased by BNP Paribas, Citigroup Global Markets Inc., Goldman, Sachs & Co. and J.P. Morgan Securities plc, as “Initial Purchasers”, for their offering to institutional investors outside of Chile, including in the United States and elsewhere.

The Bonds were issued and created in dematerialized form and registered in book-entry form at the central securities depositary in Chile, Depósito Central de Valores S.A., Depósito de Valores (“DCV”) and listed for trading on the Santiago Stock Exchange (Bolsa de Comercio de Santiago) and the Bolsa Electronica.

Aside from its size, this transaction represents a landmark in the international finances of the Republic. It is the first time in history that the Republic offers Chilean peso denominated instruments simultaneously to the international and domestic capital markets. It is the first Chilean law governed debt issuance that is placed in the international markets and the first to be governed by the newly reformed Tax Code which puts the withholding obligation on interest payments on the issuer thus liberating local intermediaries and custodians from any tax compliance obligation. Thirdly, the distribution and trading of these sovereign Bonds will for the first time clear and settle in the book-entry system of the DCV thus allowing investors to hold book-entry interests in the Bonds directly or indirectly through a DCV participant account, including Euroclear (or its nominees).  DCV established electronic securities transfer, processing, depositary and custodial links among DCV Participants (including Euroclear), either directly or through custodians and depositaries.  These links allow securities to be issued, held and transferred among clearing system participants without the physical transfer of certificates.

The team at M&B was led by partners Guillermo Morales and Matías Langevin with Senior Associate Jaime Rosso and Associate María José Rojas.

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