• A sophisticated structure will contribute to ensuring the sustainability of the power generation sector in Chile.

• More than 99% of Chile's power generation companies affected by the stabilization law are participating in the transaction.

• This transaction is the largest mobilization of private resources in IDB Invest's history and one of the most significant capital markets transactions in Latin America.

In a key step to ensure the stability of the Chilean energy system and its tariff stability, IDB Invest has structured a facility to purchase more than 99% of the certificates of payment issued by the Tariff Stabilization Fund (FET), in accordance with Chile's new MPC Law (Law No. 21.667). 

The transaction will bring to a close the accrual of debt with power generation companies in Chile and address their immediate liquidity and long-term financial sustainability.

Through purchase facilities provided to 26 power generation companies in Chile, which represents 99% of the industry, IDB Invest agreed to purchase the certificates of payment issued to each of them for up to $2.4 billion. This operation marks the largest mobilization of private resources ever undertaken by IDB Invest.

The structure of this purchase facility is comprised of a Facility A of up to $240 million financed with IDB Invest's own funds, and a Facility B of up to $2.16 billion financed through private placements of debt securities under 144A Reg S in the international capital markets. The closing of the purchase facility and the issuance of the debt securities are subject to customary conditions precedent and are expected to occur on or about October 24, 2024. 

The purchase of certificates of payment by IDB Invest will primarily benefit consumers identified as vulnerable, and help ensure a controlled transition to market prices for electricity services and provide financial sustainability to the energy generation companies.

The Minister of Energy, Diego Pardow, stated that “IDB and IDB Invest have been strategic partners of the Chilean State in the design and implementation of public policies for tariff stabilization and subsidies in the electricity sector. I want to thank them for their constant support and collaboration in addressing these important challenges that have allowed us to regularize the debt with electricity generators and provide the subsidy that 1.6 million vulnerable households in our country are already receiving.”

“This project is a clear example of working together with the public sector and IDB Invest's ability to develop innovative financial solutions to mobilize private capital to scale impact in the region,” stated James Scriven, CEO of IDB Invest.

IDB and IDB Invest have provided fundamental collaboration in the design and implementation of the new Law, in addition to advising the Government on various aspects of it, such as designing a subsidy mechanism for vulnerable families and offering guidance for the transition process towards a new electricity market structure, promoting clean energy generation and climate action.

This financing responds to the need for an extension of the MPC mechanism until 2035, along with the increase of the MPC balance limit from $1.8 billion (see press release here) to $5.5 billion, facilitating debt management.

It is expected to contribute to the following United Nations Sustainable Development Goals (SDGs): Affordable and Clean Energy (SDG 7), Industry, Innovation, and Infrastructure (SDG 9), and Partnerships for the Goals (SDG 17).

About IDB Invest

IDB Invest, a member of the Inter-American Development Bank Group, is a multilateral development bank committed to promoting the economic development of its member countries in Latin America and the Caribbean through the private sector. IDB Invest finances sustainable companies and projects to achieve financial results and maximize economic, social, and environmental development in the region. With a portfolio of $21 billion in assets under management and 394 clients in 25 countries, IDB Invest provides innovative financial solutions and advisory services that respond to the needs of its clients in a variety of sectors.

Participating Entities:

• Lead Structuring Bank for the Facilities and Purchaser of Record of the Certificates of Payment: IDB Invest.
• Structuring Bank: Goldman, Sachs & Co. LLC.
• Bookrunners: Goldman, Sachs & Co. LLC; J.P. Morgan Chase & Co.; Itaú BBA USA Securities.
• Power Generation Entities: Acciona Energía Chile Holdings, S.A.; Aela Generación S.A.; AES Andes S.A.; Cerro Dominador CSP S.A., Chungungo S.A.; Colbún S.A.; Cóndor Energía SpA; Empresa Eléctrica Caren S.A.; Engie Energía Chile S.A.; Enel Generación Chile S.A.; Enel Green Power Chile S.A.; Eólica Monte Redondo SpA; GM Holdings S.A.; Huemul Energía SpA; Ibereólica Cabo Leones II S.A.; Norvind S.A.; Parque Eólico Cabo Leones I S.A.; PE Cabo Leones III SpA; PV Salvador S.A.; San Juan S.A.; Santiago Solar S.A.; Sonnedix Cox Energy Chile SpA; SPV P4 SpA.; WPD Duqueco SpA.; WPD Malleco SpA.; WPD Negrete SpA.
• Agents and Account Banks: Citibank, N.A.; Banco De Chile; Administradora De Fondos De Inversión Amicorp S.A.
• Legal Advisors: Clifford Chance; A&O Shearman; Winston and Strawn; White & Case; Milbank; Guerrero Olivos; Claro & Compañía; Morales & Besa; Kunstmann Spiess Abogados
• Technical Advisor: Systep.
• Chilean Custodian Agent for the Certificates of Payment: Deposito Central de Valores S.A.