With geopolitics and higher rates testing investor appetite for ESG risk, many sovereigns have struggled to keep sustainable funding programs front of mind. Chile has not. The transaction set that secures the award for Sustainable Sovereign Issuer of the Year underscores a strategy built on consistency, depth and execution across currencies and markets, even as ESG issuance globally loses momentum.
Chile’s 2025 program paired a flagship hard-currency social bond with a sophisticated local-currency exercise that combined new money with liability management. Together, the deals reinforced the sovereign’s credibility with global ESG investors while strengthening the peso curve at home.
The centerpiece came in January, when Chile returned to the euro market with €1.7 billion of seven-year social bonds carrying a 3.75% coupon. The transaction launched alongside a conventional US dollar benchmark, allowing the sovereign to tap two investor bases in a single, tightly coordinated outing. The euro tranche proved the star. Demand reached roughly four times the final size, with orders from 178 accounts, enabling spreads to be tightened by about thirty-five basis points from initial guidance.
The quality and depth of the book mattered as much as the size. Large anchor orders sat alongside broad real-money participation, allowing Chile to price through secondary levels and achieve a negative new issue concession of around five basis points on the euro tranche. The bonds were upsized from an initial range of roughly €1.0 billion to €1.5 billion to the final €1.7 billion as demand built. The result was a liquid, on-the-run ESG benchmark in a market where sustainable sovereign supply has thinned.
“We spotted much demand for the social bond, and also the diversification of the investor base, which is something that we have constantly observed,” says Victor González, head of the debt office at Chile’s finance ministry. “We have also noticed that the European market is slightly more interested than the American.”
The euro social bond was issued under Chile’s sustainable debt framework, with an amount equal to the net proceeds earmarked for eligible social expenditures within the national budget. That clarity on use of proceeds, combined with Chile’s track record of reporting, has become a defining feature of its ESG curve and a key factor in sustaining investor confidence through market cycles.
Running in parallel was a US dollar offering of $1.6 billion in twelve-year notes due 2037, priced at a 5.65% coupon. The dollar tranche was equally well received, printing at flat new issue concession and benefiting from the momentum generated by the euro bookbuild.
Chile’s sustainable agenda did not stop in hard currency. In June, the sovereign executed one of the most technically impressive local-currency transactions of the year, issuing CLP1.97 trillion of peso-denominated social bonds across eight-year and fifteen-year maturities, equivalent to about $2.15 billion. The new bonds created sizable benchmarks in the 2033 and 2040 tenors, extending duration in pesos and aligning supply with the needs of domestic pension funds and insurers.
Crucially, the new issuance was paired with a concurrent cash tender offer for four outstanding peso bonds due 2025, 2026, 2028 and 2033. By retiring these lines while launching the new benchmarks, Chile smoothed its near-term maturity profile, reduced refinancing risk and concentrated liquidity into fewer, larger series.
“The continuity of the program shows that the commitments made by Chile are serious,” González says. “It is important to be consistent with steps already taken. Investors need security about the program.”
From a market development perspective, the impact was tangible. The scale of the new peso benchmarks supports tighter bid–ask spreads, better repo financing and clearer price discovery along the curve, feeding through into more efficient pricing for peso-denominated risk across the economy.
Chile’s 2025 activity capped a multi-year run of ESG issuance across dollars, euros and pesos, combining new money with exchanges and tenders as conditions dictate. With its framework now expanded to include the potential issuance of biodiversity bonds, Chile continues to adapt its sustainable strategy rather than dilute it, setting a benchmark for sovereign ESG issuance at a challenging moment for the asset class.