IDB Invest Supports Electricity Price Stability for Consumers and Small Businesses in Chile
*Updated August 30, 2023:
The first disbursement of IDB Invest's financing facility was made on August 30, reaching nearly $900 million, which represents about half of the program created by the MPC Law in Chile. This disbursement includes an "A" tranche of $110 million from IDB Invest’s own resources, and $784 million mobilized through bond issuances placed in the global debt markets with a maturity date.
- The project consists of an innovative financial solution for resource mobilization, replicable in other countries.
IDB Invest has structured a financing facility, entailing a B bond of up to $1.8 billion, to reduce the impact on energy companies in Chile due to the deferral of payments established by Law No. 21,472, known as the MPC Law.
The expected development benefits consist of stabilizing the price of electricity for consumers subject to price regulation, including Chilean families and small companies, and supporting the financial sustainability of energy companies.
The MPC Law stabilizes energy tariffs for regulated consumers, mainly residential households and small companies, and establishes a postponement of payments to energy companies backed by the issuance of payment certificates from the MPC Fund, created by this law. Through the financing facility, IDB Invest will purchase all eligible payment certificates of the fund.
The product known as a “B bond” is a new financial structure through which IDB Invest acts as the buyer of the total amount of the certificates, financing portion “A” with its own resources of $180 million, while portion “B” is financed through the issuance of credit notes in the global debt market. In this way, the investors of the B bond benefit from IDB Invest’s preferred creditor status.
This financial structure allows for a greater mobilization of resources from third parties, approximately $1.6 billion, consisting of two bond issuances led by Goldman Sachs and placed with JP Morgan and ITAU BBA as joint bookrunners.
This deal demonstrates IDB Invest's ability and commitment to continue developing innovative financial solutions and mobilizing private capital, scaling impact, and improving lives in the region.
The operation is expected to contribute to the following UN Sustainable Development Goals (SDGs): Affordable and Clean Energy (SDG 7), and Industry, Innovation, and Infrastructure (SDG 9).
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 $16.33 billion in assets under management and 394 clients in 25 countries, IDB Invest provides innovative financial solutions and advisory services that meet the needs of its clients in a variety of industries.