Morales & Besa advises Republic of Chile on social bonds offering

Morales & Besa has counselled the Republic of Chile, acting through the Ministry of Finance, on the issuance and offering of new sovereign social bonds

 Morales & Besa has acted as special legal counsel to the Republic of Chile and its Ministry of Finance on: the reopening of a bond maturing in 2031, for a principal amount of $300,000,000 and a coupon rate of 2.450%; and on the issuance of a social bond due 2041, for a principal amount of $1,700,000,000 and a coupon rate of 3.100%.

The transaction was closed on May 7th, under the jurisdictions of Chile and New York, and was valued at approximately US$2,000,000,000.

The proceeds from the sale of the 2041 bonds will be used to finance budgetary programmes “eligible social expenditures” under the Sustainable Bond Framework published by the Ministry of Finance under the standards of the International Capital Market Association (ICMA). The proceeds from the sale of the 2031 bonds will be used for general purposes of the Chilean government.

This issue obtained a high market demand of $6,350,000,000,000, 3.2 times the amount awarded. In addition, the coordination team stood out because the operation was executed in record time, taking into account the restrictions caused by Covid-19.

Morales & Besa’s team was formed by partner Guillermo Morales (pictured left), senior associate Santiago Martínez (pictured right), and associates Bárbara Echaiz and Abel Flores. Linklaters LLP, New York counselled the Republic of Chile, while Cleary, Gottlieb, Steen & Hamilton LLP, New York and Garrigues, acted as counsels to the underwriters.