Chile places the first sovereign sustainability-linked bond in local currency

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Chile places the first sovereign sustainability-linked bond in local currency

07/20/2023 Since 10 months

The Government of Chile, through the Ministry of Finance, has completed the placement of its first sustainability-linked bond (SLB) in Chilean pesos in the global financial market, being the first country in the world to issue sovereign debt of this type in local currency.

The transaction was for an amount in local currency equivalent to about 2,200 million dollars. The new SLB bond matures in November 2037 and has a 5.3% annual coupon, which could be subject to an increased rate based on Chile's compliance of the following targets:

• Achieve annual greenhouse gas (GHG) emissions of 95 MtCO2eq before December 31st, 2030.

• Achieve a maximum GHG budget of 1,100 MtCO2eq between January 1st, 2020 and December 31st, 2030.

• Reach at least 40% of women in Board positions of reporting companies, subject to the supervision of the Financial Market Commission, as of December 30th, 2031.

If any of these goals are not achieved, the structure contemplates an increase in the coupon equivalent to 0.15% per year for each goal not achieved, starting from the payment to be made in November 2034, and until maturity.