IDB Invest structured a facility to purchase over 99% of the payment certificates issued by the Tariff Stabilization Fund in compliance with Chile’s new MPC law – an important step to ensure the stability of Chile’s energy system and tariffs. The transaction will end the accumulation of debt among power generation companies and improve their immediate liquidity and long-term financial sustainability.
As part of purchase facilities for 26 power generation companies in Chile (99% of the industry), IDB Invest agreed to purchase the payment certificates issued to each of these companies for up to $2.4 billion. This operation is the largest mobilization of private funds by IDB Invest.
The structure includes up to USD 240 million (Facility A) from IDB Invest funds and up to USD 2.16 billion (Facility B) from private placements of debt securities under 144A Reg S in the international capital markets. The closing of the Purchase Facility and the issuance of Notes is subject to customary conditions precedent and is expected to occur on or about October 24, 2024.
The measure will primarily benefit consumers identified as vulnerable and will help ensure a controlled transition to market prices for electricity services and ensure financial sustainability for energy production companies.
James Scriven, CEO of IDB Invest: “This project is a clear example of collaboration with the public sector and IDB Invest’s ability to develop innovative financial solutions to mobilize private capital and increase impact in the region.”
IDB and IDB Invest provided support in the drafting and implementation of the new law and also advised on the development of a subsidy mechanism for needy families and the transition to a new market structure that promotes clean energy and climate action.
See participating institutions here.
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 improve economic, social and environmental development. With $21 billion in assets under management and 394 clients in 25 countries, IDB Invest provides innovative financial solutions and advice that meet the needs of its clients in various sectors.
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