Simpson Thacher & Bartlett and Clifford Chance took the lead roles on a $1.2 billion sovereign bond issuance from the Republic of Guatemala aimed in part at helping the Central American country fight COVID-19.

Simpson Thacher advised Guatemala on the dual-tranche offering as governments across the globe scramble for relief from the health and economic impacts of the new coronavirus, while Clifford Chance represented BofA Securities as global coordinator, sole bookrunner and structuring agent for the deal.

Hugo Triaca, a New York-based partner at Clifford Chance who led the firm's work on the Guatemala offering, called the issuance "groundbreaking in so many ways."

The issuance included a $500 million "social bond" due 2032 that earmarked funds for the country's efforts to prevent, contain and mitigate virus infections as well as the social and economic impact of COVID-19. Those investments include improvements to healthcare infrastructure and measures to address food security —such as cash payments to vulnerable residents that must be spent on food or to community kitchens that provide free meals— in a country where three out of five people live in poverty. The World Bank defines poverty as families receiving less than $3.10 per day.

Guatemala is the first Latin American country to include COVID-19 response efforts among eligible projects in the use of proceeds for a sovereign social bond issuance. The country argued that proceeds from the social bond tranche will help address the United Nations Sustainable Development Goals for Zero Hunger, Good Health & Well-Being, and Quality Education. 

Read more:

Cleary Gottlieb Advises on $3.24B in Financing for Chile

OVID-19 Thwarts Deal-making in Latin America—for Now