Chile on Tuesday said that it is assessing investor interest in a potential sale of bonds tied to its sustainable goals, a move that would make it the first nation to issue sustainability-linked bonds.
The offering would be part of the country’s planned sale of US$2 billion in environmental, social and governance (ESG) bonds overseas this month, adding to the US$4 billion raised in that format already this year.
That would complete this year’s US$6 billion external markets issuance target, Cristobal Gamboni, head of the Chilean Ministry of Finance’s newly created Green Finance Office, said in an interview earlier this month.
Chile intends to use the proceeds from its first sustainability-linked bond sale to address greenhouse emissions and to promote the diversification of the country’s energy sources into renewable energy, the ministry said in a statement.
It has mandated BNP Paribas SA, Credit Agricole CIB and Societe Generale to organize fixed-income investor meetings in the US and Europe, it said in the statement.
The meetings were to start yesterday.
The investor presentation would focus on its newly established sustainability-linked bond framework.
A euro benchmark bond offering of about 15 years in maturity and a benchmark bond offering denominated in US dollars of about 20 years could follow, subject to market conditions, people familiar with the mandates said, asking not to be identified as the details are private.
If the potential sustainability-linked bonds go ahead, they would be the first from a nation, data compiled by Bloomberg showed.
Global sales of such bonds, a subset of ESG debt, hit a record US$110 billion last year, compared with US$11 billion issued in 2020, the Bloomberg data showed.
Moody’s ESG Solutions expects issuance of the debt to hit US$150 billion this year.
Sustainability-linked bonds are growing in global popularity because they can be used by a wider pool of borrowers, including those without big environmental projects, allowing them to tap a growing ethical fund industry and get cheaper borrowing costs.
Firms have to pay a set penalty if they fail to meet targets, yet there is no stipulation these need to be more ambitious than goals they already have.
Chile is hoping to generate 100 percent of its energy emissions-free by 2050, according to the framework.
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