Chile launches first tariff stabilisation bond
Eloise Hardy

Holland & Knight LLP in New York has helped state-owned Chile Electricity raise US$489 million in Latin America’s first-ever tariff stabilisation financing, after the government established a law in late 2019 capping electricity prices after national social unrest.

Holland & Knight also advised TMF Chile as verification agent, alongside Chilean firm Baraona Marshall & Cia.

Several Clifford Chance LLP offices helped Goldman Sachs as underwriter and IDB Invest as commitment provider. Latham & Watkins LLP in New York and Chile’s Carey advised Goldman Sachs too, while Guerrero Olivos in Santiago also helped IDB Invest.

The deal closed on 8 February.

Chile Electricity will use the proceeds from the issuance to buy receivables from a group of power generation companies to monetise credits owed to them by distribution companies, thereby providing the generation companies with liquidity. The generation companies relied on Shearman & Sterling LLP in New York and Chilean firms Claro & Cía and Morales & Besa.

The transaction comes after the Chilean government passed a law in late 2019 which established a mechanism to temporarily cap the tariffs that electricity distribution companies could charge their customers. The law reversed a 9.2% price increase and froze the country’s electricity prices, which affected the distribution companies' ability to pay generation companies. The law followed the social unrest that broke out in Chile in October 2019 as a reaction against social inequality and high living costs.

Following Chile Electricity’s issuance, Clifford Chance also advised IDB Invest, Banco Santander and BNP Paribas in connection with an A/B purchase facility through which they monetised credit rights held by another group of Chilean power generation companies for US$139 million.

Counsel to those generation companies could not be confirmed prior to publishing. That transaction closed on 12 February.

The deals are the first of several debt transactions expected to take place under the law.

Other Latin American countries have implemented new laws related to electricity prices in recent times too. Guatemala passed an electricity law last May, which stopped power distribution companies from suspending their supply to customers unable to pay their bills because of the covid-19 pandemic.

Counsel to PEC Management and Chile Electricity

Holland & Knight LLP

Partner Peter Baumgaertner, counsel Dan Brown and associate Julia de la Parra in New York

Counsel to TMF Chile Asesorías Empresariales

In-house counsel - Ed O’Connell, Francisca Pérez, Rosario Arriagada and Augusta Quiñones

Baraona Marshall & Cia

Partners Juan Manuel Baraona, Juan Pablo Baraona, Raúl Marshall and Francisca Villamán, and associates Trinidad Sáenz, Jeanne Marie Miquel and Felipe Pérez in Santiago

Counsel to Goldman Sachs and IDB Invest

Clifford Chance LLP

Partners Fabricio Longhin and associates Alberto Haito in Washington, DC; partners Gareth Old and Paul Koppel, and associates Mariana Estévez, Nicolás Ocampo, Jaime Turcios, Giancarlo Reanda, Hannah Richard and Thomas Koh in New York; partner Avrohom Gelber in London; partner Michiel Sunderman and associate Nolan Groenland in Amsterdam; associate Laura Loaiza in São Paulo

Counsel to Goldman Sachs

In-house counsel - Ariel Fox

Latham & Watkins LLP

Partners Gianluca Bacchiocchi and Guido Liniado in New York


Partners Salvador Valdés, Felipe Moro, Patricia Silberman and Manuel José Garcés, and associates José Tomás Hurley, Ignacio Valenzuela, Pedro Gutiérrez, Camilo Lledó, Roberto Villaseca, Loreto Ribera, Jaime Coutts, Diego Hormazábal, Gabriela García, Vicente Güell, Rafael Mackay, Francisco Torm and Rodrigo Sifón in Santiago

Counsel to IDB Invest

In-house counsel - Ignacio Rodríguez-Viña

Guerrero Olivos

Partners Clemente Pérez, Miguel Coddou and Alejandro Chechilnitzky, and associates Felipe Frühling, Sebastián Marambio and Antonia Namur in Santiago

Counsel to AES Gener, Colbún, Enel Green Power Chile, Enel Generación Chile, Engie Energía Chile, Eólica Monte Redondo and Guacolda Energía

In-house counsel to AES Gener and Guacolda Energía - Andrea Sougarret, Jennifer Gillcrist and María Paz Cerda,

In-house counsel to Colbún - Rodrigo Pérez and Rafael Goldsack

In-house counsel to Engie - Fernando Valdés, Francisca Vásquez and Felipe Artigas

Shearman & Sterling LLP

Partners Cynthia Urda Kassis and Stuart Fleischmann and associates Augusto Ruiloba, Cheng Jean Liang and Yi Zhou in New York

Claro & Cía

Partners Rodrigo Ochagavía and Luisa Núñez, counsel Patricio Smart and associates Nicolás Maturana, Alberto Eguiguren and Benjamin Gutiérrez in Santiago

Counsel to Enel Generación Chile and Enel Green Power Chile

In-house counsel - Luis Ignacio Quiñones and Josefa Rodríguez

Morales & Besa

Partner José Miguel Carvajal and associates Clemente Silva, Santiago Martínez, Victoria Alonso and Gonzalo Machuca in Santiago

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