IDB Invest structured a facility to purchase over 99% of certificates of payment issued by the Tariff Stabilization Fund, in accordance with Chile's new MPC Law, in a key step to ensure the stability of Chile's energy system and tariffs. The transaction will end the accrual of debt with power generation companies and address their immediate liquidity and long-term financial sustainability.
Through purchase facilities provided to 26 power generation companies in Chile (99% of the industry), IDB Invest agreed to purchase the certificates of payment issued to each of them for up to $2.4 billion. This operation marks IDB Invest's largest mobilization of private resources.
The structure is comprised of up to $240 million (Facility A) from IDB Invest funds, and up to $2.16 billion (Facility B) from private placements of debt securities under 144A Reg S in the international capital markets. The purchase facility closing and debt securities issuance are subject to customary conditions precedent and expected to occur around October 24, 2024.
The operation will primarily benefit consumers identified as vulnerable, and help ensure a controlled transition to market prices for electricity services and provide financial sustainability to energy generation companies.
James Scriven, IDB Invest CEO: "This project is a clear example of working together with the public sector and IDB Invest's ability to develop innovative financial solutions to mobilize private capital to scale impact in the region."
IDB and IDB Invest provided support in the design and implementation of the new Law, in addition to advisory on designing a subsidy mechanism for vulnerable families and transitioning toward a new market structure promoting clean energy and climate action.
