Morales & Besa provides legal advice to the Republic of Chile and the Ministry of Finance on the issuance of sovereign bonds linked to sustainability.

March 11, 2022

Morales & Besa acted as special local counsel to the Republic of Chile and its Ministry of Finance in connection with the issuance, global offering and placement of the world’s first sovereign sustainability-linked bonds for an amount of $US2,000,000,000 due in 2042 and a 4.346% interest rate.

BNP Paribas Securities Corp., Credit Agricole Securities (USA) Inc., and SG Americas Securities, LLC, acted as underwriters, joint lead managers and book-runners in the issuance and placement of the bonds. The Bank of New York Mellon, acted as trustee in connection with the issuance of the bonds.

Unlike green bonds and other sustainability-labelled bonds, sustainability-linked bonds (SBLs) are not linked to specific projects or expenditures, instead they are linked to the achievement of pre-determined sustainability targets, so that if the target is missed, there is a financial penalty for the issuer, usually in the form of a higher coupon. For this issuance, Chile has included as targets: (a) to reduce carbon gas emissions to a maximum of 95 MtCO2e in 2030 and not to exceed a maximum of 1,100 MtCO2e between 2020-2030; and (b) to reach 60% of electricity produced by non-conventional renewable energies in 2032.

The advice was provided by the Capital Markets area and was led by partner Guillermo Morales. Associates Santiago Martínez, María Francisca Bannura and Bárbara Echaiz also participated

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