NEWS
Chile obtains in international markets historically low rates on green and social bond issuance
01/20/2021 Since 1 month

In line with the financing plan for 2021 reported in December 2020, the Ministry of Finance issued Treasury bonds in dollars and euros for a total amount of approximately US$ 4.25 billion in January.

The operation consisted of the issuance of green and social bonds for a total amount of €1.65 billion (equivalent to approximately US$ 2 billion). Managers mandating environmental, social, and governance (ESG) assets demanded 48.5% of the total amount issued.

The green bond in euro maturing in 2031 was reopened for a total amount of € 400 million at a rate of 0.399%, 60 basis points above the mid-swap rate for a term of eleven years The spread is equivalent to a zero basis point concession to the bond value in the secondary market. This is the lowest rate obtained by the Treasury for a euro-denominated bond issue.

A new social bond maturing in 2051 was issued for €1,250 million at a rate of 1.298%, 125 basis points above the mid-swap rate for a term of thirty years. The spread is equivalent to a zero basis point concession in relation to the estimated value based on secondary market information. This is the longest duration euro bond issued to date by the Republic of Chile, and aims to contribute to the development of new benchmarks in international markets.

On the other hand, Treasury bonds were also issued in dollars for US$ 2,250 million. The green bond maturing in 2032 was reopened for a total amount of US$ 750 million at a rate of 1.962%, 87 basis points above Treasury bonds. The spread is equivalent to a negative concession of three basis points relative to the secondary market value of the bond. This is the lowest rate obtained by the Treasury for a dollar bond issue with that maturity.

In addition, a new social bond maturing in 2061 was issued for a total amount of US$ 1.5 billion at a rate of 3.116%, 127 basis points above the Treasury rate. The spread is equivalent to a negative concession of three basis points relative to the estimated value based on secondary market information. This is the longest duration dollar bond issued to date by the Republic of Chile, and aims to contribute to the development of new benchmarks in international markets.

Considering the latest issues, the Republic of Chile has issued a total of approximately US$ 12.6 billion in ESG bonds (issued in euros, dollars and pesos) since 2019. Regarding the projects included in the green portfolio, the inclusion of new Renewable Energy projects, Energy Efficiency projects associated with MINVU, Green Building projects of the Ministry of Public Works, as well as new electric buses of the RED system, in addition to the existing ones, stand out.

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