Cardones – Polpaico line is key to decarbonization:
ISA INTERCHILE debuts in the international financial market with its first green project bond worth USD 1.2 billion
- The instrument issued by the company achieved a BBB+ rating from Fitch Ratings, while Moody’s assigned it an equivalent Baa1 rating.
- This financial milestone represents the largest placement of a green project bond in the history of the instrument in Latin America and the Caribbean.
Santiago, July 26, 2021.- With the aim of refinancing the debt commitments acquired during the construction phase of the 2×500 kV Cardones – Polpaico Transmission Line, a key infrastructure for decarbonizing the grid and contributing to the mitigation of climate change, the energy company ISA INTERCHILE issued its first green bond on Monday for a total amount of USD 1.2 billion with a 35-year term.
The instrument listed on the Singapore Exchange Securities achieved a long-term BBB+ rating from Fitch Ratings, while Moody’s assigned it a Baa1 rating. In turn, the credit bond presented by the electric transmission company was evaluated by Sustainalytics, a specialized agency that certified to potential investors that this green bond meets environmental, social, and governance (ESG) criteria.
The general manager of ISA INTERCHILE, Gabriel Melguizo, highlighted that the decision to issue this green bond “allows us not only to refinance commitments on favorable terms of high liquidity and low rates, but it is also an important step to strengthen links with the capital market and investors, in addition to reflecting the degree of maturity that we have achieved and the trust we generate internationally as a responsible and committed company in the long term with the sustainable energy development of Chile, where energy transport is the axis of the long-awaited decarbonization of the country’s energy grid.”.
Meanwhile, the company’s finance manager, Aquiles Vargas, explained that “this debt instrument is historic for our subsidiary and for ISA, not only for its magnitude, exceeding one billion dollars, but also for the high rating granted by the main rating agencies and its ESG certification, which is of utmost importance in the current context of Climate Change. This is also a reflection of the confidence that our company transmits to the financial markets.”
It should be noted that Grupo ISA has been a pioneer in the placement of this type of bonds. ISA CTEEP, the company’s subsidiary in Brazil, was the first company in the Transmission segment to carry out an operation with green debentures in Brazil for BRL 621 million and an oversubscription of 2.5 times. Likewise, the Consorcio Transmantaro subsidiary in Peru was the first to issue green bonds in the international capital market for USD 400 million with orders that reached 5.7 times the placement.
The company mandated Scotiabank as Global Coordinator and J.P. Morgan and Goldman Sachs as Joint Bookrunners for coordination with investors and placement of the bond, whose papers reached a value of USD 1.2 billion in the stock market with orders for more than twice the placement and an interest rate of 4.5%. For its part, the law firms Barros & Errázuriz and Mayer Brown advised the company in this process.
“ISA INTERCHILE’s transaction was a resounding success, obtaining enormous demand of USD 2.5 billion from more than 100 global investors from America, Europe, and Asia, including ESG investors and sustainable funds,” says Carlos Garcia, Director of Debt Capital Markets for Latin America and the Caribbean at Scotiabank. The executive adds that “this iconic transaction achieved important milestones for ISA INTERCHILE, becoming the largest green bond issuance for a project in the electricity sector in Latin America, while at the same time obtaining the lowest dollar financing cost of any corporate project bond in the region and having the longest dollar term.”
The 2×500 kV Cardones-Polpaico Transmission Line began operating in May 2019, at which point the inherent risks associated with the construction of a project of this magnitude decrease. For this reason, the company chose to refinance its commitments with financial institutions. This 753 km infrastructure, which includes three new substations, allowed the National Electric System to be fully interconnected and is fundamental to meeting decarbonization objectives as it evacuates non-conventional renewable energy generated in northern Chile to the central part of the country.
