Certification

The Climate Bonds Standard and Certification Scheme is a labelling scheme for bonds, loans & other debt instruments. Rigorous scientific criteria ensure that it is consistent with the goals of the Paris Climate Agreement to limit warming to under 2 degrees. The Scheme is used globally by bond issuers, governments, investors and the financial markets to prioritise investments which genuinely contribute to addressing climate change.

 

Republic of Chile

 

Chile is hosting the 25th annual UN Climate Change Conference of the Parties- ("COP25") in December 2019. As part of its national policy goals on climate change and the environment, the Government of Chile took a leading role in climate finance by being the first country in South America to issue a sovereign green bond. The Government prepared its Green Bond Framework in conjunction with the Inter American Development Bank ("IADB"). 

Chile's National Determined Contribution "NDC" as part of the Paris Agreement includes a 2030 GHG/GDP intensity target which is 30% lower compared to 2007. In June 2019, the Chile Government announced that they are considering a 2050 net zero emissions target. They have also announced that the country would close all of its coal power generation by 2040. Currently, Chile's electricity generation mix has a 40% contribution from coal power.

In November 2017, the Ministerial Council for Sustainability approved the Climate Change Mitigation and Adaptation Plan for Infrastructure Services. This latest plan is the first of its kind in Latin America and will help the government adjust the designs of planned infrastructure to mitigate the worst impacts of climate change at the community, regional and national level.

The first green bond was issued in June 2019 and was priced at 95bp over US Treasuries, which is the lowest yield ever achieved for Chile 30 year debt. The issuance attracted interest from a larger number of Europe based investors as well as 40 ESG specialist investors.

Overall, both operations were very successful and allowed the Republic to achieve several milestones including the lowest yields ever in both currencies (3.53% for the dollar-denominated and 0.58% for the euro-denominated bonds), low spreads (95 basis points over the US Treasury rate for the dollar-denominated and record-low 50 basis points over the benchmark interbank rate for the Euro-denominated bonds), record demand from global markets (12.8 times the amount offered for the dollar-denominated bonds, and 4.7 times for the euro-denominated bonds), and an important broadening of Chile’s investor base towards institutional investors with green mandates (totaled more than 460 accounts for both transactions).

 

 

Date of Issue Type of Instrument Size Tenor Country of Issuance CLIMATE BONDS SECTOR CRITERIA VERIFIER'S REPORT Annual Report Further Information
June 2019 Sovereign Bond USD 1.418 billion 31 years Chile

Solar

Low Carbon Transport

Low Carbon Buildings - Upgrades

Water Infrastructure

Pre Issuance Verification Report

post issuance verification

 

Republic of Chile green bond website

Green Bond Framework

Global Capital news article

 

July 2019 Sovereign Bond EUR 861 million (USD 979 million) 12 years Chile

Solar

Low Carbon Transport

Low Carbon Buildings - Upgrades

Water Infrastructure

Same Verification Reports as above

 

  Republic of Chile press release
January 2020 Sovereign Bond

EUR 693.685 million (USD 764 million)

tap of previous

11 years Chile Low Carbon Transport Same Verification Report    
January 2020 Sovereign Bond

USD 900m

tap of previous

30 years Chile Low Carbon Transport Same Verification Report    
January 2020 Sovereign Bond EUR 1.269 billion (USD 1.398 billion) 20 years Chile Low Carbon Transport Pre Issuance Verification Report    
January 2020 Sovereign Bond USD 750m 12 years Chile Low Carbon Transport Pre Issuance Verification Report