News

The IDB supports Chile in a sovereign green bond development

The Inter-American Development Bank (IDB) announced today that it has supported the Government of Chile in the preparation of the documentation and necessary certification for the issuance of a sovereign green bond. In more detail, the IDB supported the Ministry of Finance, in collaboration with the Climate Bonds Initiative, in the preparation of the green bond framework and in the identification of a portfolio of eligible expenditures that  will support the issuance of the first sovereign green bond in the Americas, and that could contribute to further develop the market and encourage other Chilean issuers to follow with green bonds of their own. This Framework document has been evaluated by an independent reviewer, Vigeo Eiris, that has confirmed the alignment of the Bond Program with the internationally recognized Green Bond Principles and ratified the compliance of the proposed portfolio for the 2019 issuance with the Climate Bonds Certification. Finally, the Bond Program is further aligned with the IDB Sustainable Infrastructure Framework.

A sovereign green bond will provide a strong signal of Chile’s commitment to promoting sustainable finance and the development of a low-carbon, climate-resilient economy, as well as mobilizing capital markets to support the delivery of the countries’ Nationally Determined Contribution (NDC) commitments under the Paris Agreement.  As a part of the country’s commitment, Chile seeks to encourage the development of a green asset class that can help attract foreign investment to support the country’s sustainable infrastructure needs.

“We are committed to helping countries achieve sustainable development,” said Juan Pablo Bonilla, Manager of the Climate Change and Sustainable Development Sector. “Green bonds can allow public and private institutions mobilize investments at scale towards low-carbon and climate-resilient investments aligned with its international commitments.”

Green and sustainable bonds are a powerful way to mobilize private capital for climate and sustainability friendly projects and activities. The global market has been soaring in the last five years with annual issuances going from US$13 billion in 2013 to more than US$150 billion in 2018. In Latin America and the Caribbean (LAC), issuances have been mainly from Financial Institutions but represent less than 5% of last year’s global issuances – suggesting a significant untapped potential.

Through technical assistance programs, risk mitigation instruments and guarantees, and anchor investments in selected private placements, the IDB Group has already been supporting the development of green and sustainability bond markets in LAC. More recently, in 2019, with funding from the NDC Accelerator Trust Fund and SECCI, the bank approved a technical cooperation for US$1,900,000 to support Green Bonds Market in the region and expand the experience to new public-sector issuers such as governments and municipalities, and to new instruments like sustainable bonds. 

Issuing green bonds in the LAC region could also help countries to deliver on their commitments under the Paris Agreement, the Sustainable Development Goals, and the Addis Ababa Agenda.

More details on the Green Bond Framework for the Republic of Chile are available at the page of the Public Debt Office of the Ministry of Finance.

About the IDB Group

The IDB Group is the leading source of development finance for Latin America and the Caribbean. It helps to improve lives by providing financial solutions and development know-how to public and private sector clients. The group comprises the IDB, which has worked with governments for 60 years; IDB Invest, which serves the private sector; and IDB Lab, which tests innovative ways to enable more inclusive growth.