Chile to issue $1.5 billion green bond

Chile’s Minister of Finance, Felipe Larraín, has announced the country’s first green bonds will be launched this year.

“The government of President [Sebastián] Piñera has defined as one of its axes the fight against climate change,” Larraín said. “At this regard, we have committed ourselves that in Chile no new coal fired power plants will be built and there will also be a closure plan for the existing thermoelectric plants.”

The minister said the green bond issue may amount to up to $1.5 billion in foreign markets. “Recent evidence indicates that the rates that have been achieved by green bonds are lower than comparable sovereign bonds in the same term and in the same currency,” he added.

The funds generated will be used for renewable energy, electromobility, sustainable buildings, energy efficiency, water treatment and biodiversity, the Chilean government said.

Stamp of approval

The bond was evaluated by Vigeo Eiris, an independent international agency specializing in research related to environmental, social and governance issues, and has obtained the highest degree of security with respect to the contribution of the bonds considered for sustainable development, the ministry added.

The project portfolio associated with the bond, the Chilean government said, has already secured Climate Bond Initiative certification. The organization is an international body specializing in climate friendly emission standards. Chile is the second country in the world, after the Netherlands, to achieve the certification.

Several Latin American markets launched green bonds in the summer and plans for similar moves have recently been announced in Colombia, Brazil, Peru, Uruguay and Argentina.

The Netherlands issued its first, €4-6 billion ($4.46-6.69 billion) green bond on May 21. The net proceeds will be used for sustainable, climate-related expenditure and investment by the government, an official statement said at the time.