In June 2023, the Republic of Chile issued a $2.25 billion dual tranche sustainability-linked bond (SLB) and followed up with a €750 million ($813 million equivalent) SLB on the subsequent day, after being absent from the Euro market since 2021.

In conjunction, Chile updated its SLB Framework to include a third key performance indicator (KPI) regarding the percentage of women in board member positions at companies that report to the CMF (local Chilean markets regulator). With this, Chile became the first sovereign issuer in the world to include a social KPI in an SLB Framework.

For this transaction, the Republic also decided to use one of its original KPIs (GHG emissions), alongside the recently developed one. There is a coupon step-up – which varies by tranche – if the KPIs are not met

Alongside the issue, the Republic also announced its intention to commence a Selective Exchange Offer targeting a series of "brown" bonds with an aggregate outstanding amount of $11.45 billion to be exchanged for the announced new notes, to increase the Republic's proportion of ESG-labelled debt stack. Following the liability management exercise and new issue, Chile's ESG-labelled debt represents a third of its total debt.

For both tranches of the USD-bond, the combined orderbook peaked at approximately $14.5 billion and closed at $9.6 billion, with a final oversubscription of 4.2 times. For the EUR-bond, the order book peaked at approximately €3 billion and closed at €2.8 billion, with a final oversubscription of 3.7 times.

Angel Beltrán, executive director and head of ESG DCM Solutions at Santander CIB, commented: "The Republic of Chile continues to show a leadership position within the sustainable bond market. Having already pioneered in numerous innovative transactions, this USD and EUR multi-tranche transaction cements the country's commitment of targeting to have at least half of its outstanding debt with an ESG label by 2026, further demonstrating that sustainability has become fundamental for Chile's financing strategy."