2. 2022 SLB Bond Issuance and SLB Framework

During the last 5 years, the Republic of Chile (“Chile” or “the Republic”) has demonstrated a strong effort related to ESG topics, including different sectorial initiatives that finally resulted in the financial integration of these categories in its debt plan. Thus, in 2019 Chile issued its Green Bonds, in 2021 its Social and Sustainable bonds, and its first SLB bond in 2022.

In effect, on March 2, 2022 and after presenting its new Sustainability-Linked Bond framework to investors, document that integrates sustainable commitments to the financial structure of the debt, the Republic of Chile took advantage of a market window to announce a new 20-year benchmark, obtaining an outstanding result, in terms of investor participation and rates, which demonstrates the continued support of the investor community and the credibility of the Chilean commitment to its sustainable efforts. The bond reached USD 2.0 bn and was successfully priced.

This landmark transaction marks not only the first Sustainability-Linked Bond for Chile, but also the first SLB ever issued by a sovereign nation, reinforcing the Republic’s long standing commitment to sustainability and its status as the leading sovereign in the ESG space.

2.1 Context

The aforementioned issuance was made under the SLB Framework published by the Republic. In this Report, Chile establishes 2 KPIs, with their correlative Sustainability Performance Targets (SPTs). The KPIs are two:

  • KPI 1. Greenhouse Gas (GHG) emissions per year, measured in MtCO2eq.
  • KPI 2. Non-Conventional Renewable Energy (NCRE) Generation, as the percentage generated in the National Electric System, measured in megawatt hours (MWh).

As established in the Framework:

  • Each SLB may have one or more SPT Events, each with an associated event observation date and financial implication; and
  • If any KPI has two or more different event observation dates, the financial implications may be cumulative. The amount, timing, and mechanism for payment of the financial implications are set forth in the relevant legal documentation for each specific SLB issuance.

The SPTs included in the SLB Framework were the following, for each KPI:


SPT Event

Observation Date


a) Achieve GHG emissions of 95 MtCO2e by 2030

December 31, 2030

b) Achieve a maximum of 1,100 MtCO2e between 2020 and 2030

December 31, 2030


a) Achieve 50% electric generation derived from NCRE sources by 2028

December 31, 2028

b) Achieve 60% electric generation derived from NCRE sources by 2032

December 31, 2032

In June 2023, in order to broaden the scope of the SLB Framework, including its social objectives, Chile included a KPI related to gender equality. This KPI was the "Percentage of women in Board Member positions at companies that report to the CMF (local regulator)". This new KPI was considered by Sustainalyics, entity that provided the Second Party Opinion to the Framework, as "Very Strong". The Sustainability Performance Target set by Chile was 40%, which was considered as "Highly Ambitious" by Sustainalytics. In 2022, this percentage reached 14.0%.

2.2 Financial and SLB Characteristics

As mentioned, the first SLB Bond of the Republic obtained successful conditions. Its financial characteristics are presented in Table 1.

Table 1

Financial characteristics of the 2022 SLB Bond Issuance.






USD2 billion (New Money)

Pricing Date (T)


March 2, 2022

Settlement Date


March 7, 2022 (T+3)



March 7, 2042

Coupon / Yield


4.340% / 4.346%






T + 200 bps

In addition, this Bond included, as mentioned, certain financial implications derived from SPT Events, as defined in the SLB Framework. In specific, it includes the possibility to an increase in the coupon payment in case Chile does not comply with the SPT committed (step-up). The key aspects regarding the step-up selected were:

  • The bond contained two step ups, each one by 12.5 bps in case of not complying with the target.
  • Both step-ups occur on March 7, 2034 associated with the following targets:
  • Step up 1: KPI 1, a) Achieve GHG emissions of 95 MtCO2e by 2030.
  • Step up 2: KPI 2, b) Achieve 60% electric generation derived from NCRE sources by 2032.

Thus, the maximum annual step-up could amount 25 bps. Considering the maturity of the bonds, it implies a potential total penalty (maximum) of 200 bps.

2.3 Reporting commitments

Chile committed to “publish a report (SLB Report) annually, containing a qualitative or quantitative explanation of the main factors behind the evolution of the KPIs, as well as (when available) the progress of the KPIs established in this SLB Framework”.

Through this report, Chile complies with that commitment, disclosing:

  • Information regarding KPI 1, in accordance with its current NDC protocol.
  • Information regarding KPI 2, informing the participation of NCRE in the total production of the year, in accordance with data from the National Electricity Coordinator, a technical body of public law.
  • Information on the mitigation policies efforts, as well as actions and policies to comply with the targets.

[1] The spread is calculated against the reference yield. In the case of USD issuances (T), the reference is the US Treasury Bond with the closest maturity to the issued bond.

2022 | Ministerio de Hacienda