Fixed Income Pulse: Chile becomes the first sovereign from Americas to issue green bonds

Republic of Chile has issued its first two international green bonds on the London Stock Exchange’s International Securities Market. The notes are the first sustainable finance bonds to be issued by a sovereign in the Americas.

Transaction Stats

A 30-year US Dollar denominated bond was priced on 17 June and raised $1.42 bn, at a yield of 3.53% and a spread of 95 bps to US Treasuries. The bond attracted orders of over $6.7 bn from more than 300 accounts from across the globe. A subsequent 12-year Euro denominated issuance achieved high demand as well; the bond priced on 26 June raising €861m at another low yield of 0.83%. Overall, it attracted orders of €4.02 bn.

The bonds will be used to finance projects dedicated to infrastructure for electrified public transport (trains, buses), living natural resources, energy efficiency, renewable energy, water management and green buildings. 

More information can be found in the case study

As of 4 July 2019, there are 112 green and sustainability bonds from 44 different issuers in 13 currencies listed on London Stock Exchange. 16 of these bonds are listed on the International Securities Market.
 

Security

Issue Date

Amount
Issued (m)

Coupon

UST
Spread at Issue

CHILE 0.83 07/02/31

02/07/2019

€ 861

0.83%

 

CHILE 3 1/2 01/25/50

25/06/2019

$ 1,418.4

3.50%

95

A Pioneering Deal

The bonds mark several firsts – the first green bond from a sovereign from the Americas; the first time a sovereign outside the EU has issued a Euro-denominated green bond; and the first Latin American sovereign to use London Stock Exchange’s International Securities Market platform.

It is also clear that sustainable debt finance, through green bonds and other instruments, is taking a central role in capital markets. In Q1 2019 green bond issuance reached $48bn, surpassing the amount issued in the same quarter in 2018 by 42%. Year-on-year quarterly volumes also see sovereign issues of green bonds gaining a larger share of the market.

Chile – Leading Change

Chile has been a pioneer of environmental projects in its region. The United Nations Environment Programme launched a Green Economy Trade Opportunities Project in Chile in 2014, and in the same year the Chilean government committed to a National Green Growth Strategy to be completed by 2022. The country also started 2019 with a 21% of renewable energies in their power mix, with an aim of it being 100% by 2050.

As a result of its continuous involvement in working to counteract climate change Chile has been chosen to host COP 25 in December 2019. To reiterate its engagement within the sustainability space in its green bond framework Chile states: “Chile recognizes the impending necessity to transition to a low carbon economy […] and considers Chile’s current exposure to climate change related impacts as one of the country’s main challenges.”

Chile’s green bond second party opinion can be found here

LSEG’s Sustainable Finance Offering

LSEG has been working closely with investors and issuers in the transition to a low-carbon and sustainable economy for over a decade. We are developing innovative products and services in close collaboration with the market. LSEG already offers more than 100 ESG indexes and has listed on its markets 50+ ESG ETFs, more than 100 green companies and 22 green funds.

This listing further strengthens London’s position as a leading international financing centre, and the UK’s position as a leader for green and sustainable issuances from sovereigns, supranationals and corporates. London has hosted many landmark green bond issuances from sovereigns, including China’s first international green bond, Hong Kong’s first international green bond and Fiji’s green bond, the first sovereign green bond from an Emerging Market.

For further information, please visit our website, or send us an email at bonds@lseg.com or call +44 (0)207 797 3921