Chile’s pulp and paper heavyweight CMPC is a familiar name in LatinFinance’s Deals of the Year lineup. In 2025, the company returned with a transaction that broke new ground both structurally and geographically, introducing corporate hybrid bonds to the Chilean market while executing a tightly coordinated international sustainable hybrid that reset expectations for Latin American issuers.
The transaction, which wins the award for Corporate Sustainable Deal of the Year, was executed through near-simultaneous placements in domestic and global markets in the third quarter, raising a combined $1 billion equivalent in just over two weeks. At its core was a $600 million issuance of sustainable subordinated capital notes in the international market, complemented by a 10 million UF local placement equivalent to roughly $400 million.
What set the deal apart was not just its scale or timing, but its role within CMPC’s capital structure. As a hybrid instrument, half of the volume receives equity credit from rating agencies, allowing the company to reinforce its balance sheet at a moment when traditional debt issuance would have strained leverage metrics.
The timing was critical. CMPC was advancing an ambitious capital expenditure program, including preparations for a major pulp project in Brazil, just as global cellulose prices slid to cyclical lows, pressuring earnings across the sector and sharpening the company’s focus on preserving its investment-grade ratings.
Sebastián Moraga, CMPC’s chief financial officer, says the hybrid structure proved particularly well suited to those circumstances. “The hybrid bond is a particularly apt instrument for companies that have a strong capex need while they are going through a challenging conjuncture,” he says.
“The hybrid bond provides us liquidity, while at the same time it is rated as equity by rating agencies, as in their eyes it shows the issuer’s commitment to its rating,” Moraga adds.
Internationally, Inversiones CMPC issued $600 million of 32.25-year subordinated capital notes due 2057, with a seven-year first call. The notes pay a fixed coupon of 6.700% until 2032 and were structured under Rule 144A and Regulation S, governed by New York law and guaranteed by parent company Empresas CMPC. The hybrid format includes deep subordination, issuer discretion to defer coupons and replacement language aligned with global hybrid conventions.
The transaction marked CMPC’s first-ever subordinated and hybrid bond issuance, requiring the execution of a unilateral subordination deed under Chilean law — a novel step for a Chilean corporate. Investor reception was emphatic. Initial price thoughts in the low seven percent area tightened by fifty-five basis points to a 6.700% coupon, with peak demand reaching roughly $4.6 billion before closing with a final book of about $4.1 billion.
Just days earlier, CMPC completed a parallel milestone at home, issuing the first corporate hybrid bond in Chile’s domestic market. The UF-denominated notes priced with a 4.25% coupon and mirrored many of the structural features of the international tranche, helping establish a reference point for future issuers.
“CMPC is proud for having debuted this security, which is now much better known by the market, by the rating agencies and by the regulators,” Moraga says.
Beyond capital structure optimization, the deal was framed within CMPC’s sustainability financing framework, with proceeds earmarked for refinancing and eligible green and social investments. In combining sustainability-linked use of proceeds with hybrid capital mechanics, CMPC delivered a replicable template for regional corporates — a benchmark transaction that fully earns its place as Corporate Sustainable Deal of the Year.
CMPC $600m 6.700% Sustainable Subordinated Capital Notes
Banks: JP Morgan; Bank of America; Mizuho; Scotiabank; Santander;
CACIB; BNP Paribas; BBVA; BTG; Citi; Itaú
Counsel to Issuer: Sullivan & Cromwell; Cuatrecasas; Pinheiro Neto
Counsel to Lenders: Davis Polk; PPU
Legal Advice to the Trustee: Holland and Knight