21-I-0039
September 27, 2021

Japan Credit Rating Agency, Ltd. (JCR) announces the following credit rating.

Republic of Chile (security code: -)<Affirmation>
Foreign Currency Long-term Issuer Rating:
Outlook:
Local Currency Long-term Issuer Rating:
Outlook:

AAStable
AAStable

Rationale(1) The ratings are supported by the country’s track records of economic reforms and prudent
macroeconomic and fiscal management, low public debt, stable financial system, availability ofabundant mineral resources and improved mineral investment environment. On the other hand,
the ratings are constrained by its economic structure susceptible to price fluctuations of copperand other mineral resources. While the Chilean economy severely contracted in 2020 due to theimpact of the COVID-19 pandemic, JCR holds that it will strongly recover in 2021 on resumptionof economic activities brought by the progress on vaccination, the effect of an economic
package and the rise of copper prices. The fiscal deficit may continue but the public debt willremain at a low level. Considering these factors, JCR has affirmed the ratings with Stable
outlook. On a separate note, JCR has retained AA+ for the country ceiling for Chile.
(2) Chile has abundant natural resources in its long and narrow land lying from north to south along
the west coast of South America. Its nominal GDP totaled USD 253 billion, with GDP per capita
of USD 13,000 in 2020. Its copper and lithium resources are the world’s largest in terms of bothreserves and production volumes. With the mining sector accounting for about 12% of nominal
GDP and about 56% of exports in 2020, the Chilean economy is vulnerable to the fluctuation of
resource prices. In 2020, the economy contracted 5.8% in real GDP terms due to the impact ofthe pandemic. However, both consumption and investment have been strongly recovering on
resumption of economic activities after 80% of the population were vaccinated twice by the endof August 2021. Moreover, copper prices have been sharply rising. As a result, the economy
grew 18.1% year on year in real GDP terms in the second quarter of 2021, with the year
expected to end up with an annual growth rate of around 7%. The growth rate may slow toaround 3% in 2022 when the economic package will be trimmed.
(3) The government has been conducting a prudent fiscal management in accordance with thestructural fiscal balance rule since 2007. But it has frozen the application of the rule till FY2021
to prioritize the economic package in order to address the pandemic. The fiscal deficit widened
to 7.3% of GDP in FY2020 on reduced tax revenues stemming from an economic downturn andthe massive economic package. The government estimates the budget deficit in FY2021 at 7.1%
of GDP as it will continue its economic package to enhance the healthcare system and increase
the unemployment benefits and subsidies. In addition, it plans to carry out USD 5.2 billion worthof public construction projects aimed to create new jobs. While the public debt expanded due tothe increased fiscal deficit, the central government’s gross debt still stayed low at 32.5% of GDP
at the end of FY2020. The banking system retained its soundness as it kept its nonperforming
loan ratio at 1.5% and capital adequacy ratio at 14.8% at the end of May 2021. Deterioration ofasset quality caused by the pandemic proved limited.
(4) The country’s current account balance is susceptible to the fluctuation of resource prices ascopper accounts for about 50% of its exports. Its chronic current account deficit has been
financed mainly with foreign direct investment. The current account balance ended 2020 with asurplus equivalent to 1.3% of GDP on reduced imports and increased exports brought by higher
copper prices. Chile is a net creditor country when inward foreign direct investment is excluded.
JCR holds that the possibility of the country having difficulties in foreign currency funding is low.
Atsushi Masuda, Hiroshi Tonegawa

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Rating
Issuer: Republic of Chile<Affirmation>

Foreign Currency Long-term Issuer Rating: AALocal Currency Long-term Issuer Rating : AA-

Outlook: Stable
Outlook: Stable

Rating Assignment Date: September 21, 2021
The assumptions for the credit ratings and the definitions of the rating symbols are published as "Types of Credit Ratings andDefinitions of Rating Symbols" (January 6, 2014) in Information about JCR Ratings on JCR's website (https://www.jcr.co.jp/en/).
Outline of the rating methodology is shown as "Sovereign and Public Sector Entities" (November 7, 2014) in Information
about JCR Ratings on JCR's website (https://www.jcr.co.jp/en/).
The aforementioned credit ratings are unsolicited. Except in cases of a credit rating for a sovereign, JCR indicates affix "p"after a rating symbol to distinguish it from a rating with solicitation. The undisclosed information, which has material
influence on the credit rating, was not obtained from the rating stakeholder.

Japan Credit Rating Agency, Ltd.
Jiji Press Building, 5-15-8 Ginza, Chuo-ku, Tokyo 104-0061, Japan
Tel. +81 3 3544 7013, Fax. +81 3 3544 7026
Information herein has been obtained by JCR from the issuers and other sources believed to be accurate and reliable. However, because of the possibility of human or mechanical error as well as other factors,
JCR makes no representation or warranty, express or implied, as to accuracy, results, adequacy, timeliness, completeness or merchantability, or fitness for any particular purpose, with respect to any suchinformation, and is not responsible for any errors or omissions, or for results obtained from the use of such information. Under no circumstances will JCR be liable for any special, indirect, incidental orconsequential damages of any kind caused by the use of any such information, including but not limited to, lost opportunity or lost money, whether in contract, tort, strict liability or otherwise, and whether
such damages are foreseeable or unforeseeable. JCR's ratings and credit assessments are statements of JCR's current and comprehensive opinion regarding redemption possibility, etc. of financial obligations
assumed by the issuers or financial products, and not statements of opinion regarding any risk other than credit risk, such as market liquidity risk or price fluctuation risk. JCR's ratings and credit assessments
are statements of opinion, and not statements of fact as to credit risk decisions or recommendations regarding decisions to purchase, sell or hold any securities such as individual bonds or commercial paper.
The ratings and credit assessments may be changed, suspended or withdrawn as a result of changes in or unavailability of information as well as other factors. JCR receives a rating fee paid by issuers for
conducting rating services in principle. JCR retains all rights pertaining to this document, including JCR's rating data. Any reproduction, adaptation, alteration, etc. of this document, including such rating
data, is prohibited, whether or not wholly or partly, without prior consent of JCR.
JCR is registered as a "Nationally Recognized Statistical Rating Organization" with the U.S. Securities and Exchange Commission with respect to the following four classes. (1) Financial institutions, brokers
and dealers, (2) Insurance Companies, (3) Corporate Issuers, (4) Issuers of government securities, municipal securities and foreign government securities.
JCR publishes its press releases regarding the rating actions both in Japanese and in English on the same day. In case that it takes time to translate rating rationale, JCR may publicize the summary version,
which will be replaced by the full translated version within three business days. (Regarding Structured Finance products, JCR only publicize the summary version in English.)

Copyright © Japan Credit Rating Agency, Ltd. All rights reserved.

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I n f o r m at i o n D i s c l o s u r e F o r mJapan Credit Rating Agency, Ltd.

Disclosure Required by Paragraph (a)(1)(ii) of Rule 17g-7

1

Issuer:Republic of Chile

Rating Publication
Date:

September 27, 2021

The Symbol, Number, or Score in the Rating Scale used to Denote Credit Rating Categories andNotches and, the Identity of the Obligor or the Identity and a Description of the Security or Money
Market Instrument as Required by Paragraph (a)(1)(ii)(A) of Rule 17g-7
Please see the news release. If the credit rating is a private rating, please see the report for private
rating.

2

The version of the procedure or methodology used to determine the credit rating; as Required by
Paragraph (a)(1)(ii)(B) of Rule 17g-7
Please see the news release. If the credit rating is a private rating, please see the report for private
rating.

3

The Main Assumptions and Principles used in Constructing the Procedures and Methodologies
used to Determine the Credit Rating as Required by Paragraph (a)(1)(ii)(C) of Rule 17g-7
The credit rating methodology assumes, in principle, to be applied to assess the likelihood of agiven debt payment in light of its issuer’s condition and business environment, etc. in the relevant
future. There is certain limitation, however, in the time horizon that the rating foresees.
The credit rating methodology assumes, in principle, that the factors posted in the below areparticularly important for such likelihood to be determined, and that the rating determination ismade by evaluating each of them not only quantitatively but also employing qualitative analyses.

A) Economic Base
The likelihood of a given debt payment is highly conditional to the issuing government‘s ability tomaintain/expand the economic base into the future with maintaining soundness of financial systems.
B) Fiscal Base
The likelihood of a given debt payment is highly correlated to fiscal balance, public debt and otherfactors of the issuing government’s fiscal condition.
C) External Positions
The likelihood of a given debt payment is highly correlated to the liquidity positions which change
along with the international balance of payments and the international investment position.

1/5D) Social and Political Bases and Economic Policy
The likelihood of a given debt payment is highly conditional to the social and political stability,
effectiveness of economic and monetary policies as well as international economics.
E) Related Parties’ Stance of Support/ Assistance for the Government
The likelihood of a given debt payment is affected by the stance of the credit enhancement provider
and other related parties with regard to their stance of support/ assistance for the issuing government.
F) Order of Seniority in Debt Payment
The likelihood of debt payment can be different between given debts of the same issuer. The
likelihood of debt payment for an individual debt is dependent on the issuing government’s will, and/or its rank relative to other debts of the same government in the order of seniority in principal/ interest
payment which is determined by design as financial product or by international practice, etc.

4

The Potential Limitations of the Credit Rating as Required by Paragraph (a)(1)(ii)(D) of Rule 17g-7
The credit rating herewith presented by JCR is its summary opinion with regard to the likelihood ofgiven debt payment and hence not necessarily a perfect representation of such likelihood. The credit
rating is not intended to estimate the probability of default or the loss on given default, either.
The objective of the credit rating herewith presented does not include any concerns other than thelikelihood of debt payment, such as risks of price changes, market liquidity, etc.
The credit rating herewith presented is necessary to be reviewed along with possible changes of theissuer of rated objects in its business performance and/ or circumstances which include regulatoryenvironment, and hence subject to possible alteration.

5

Information on the Uncertainty of the Credit Rating as Required by Paragraph (a)(1)(ii)(E) of Rule
17g-7
The information used for the determination of credit rating as herewith presented is obtained by
JCR from the issuer of rated objects and other sources that JCR trusts in terms of accuracy andreliability but possibly contains errors due to human, non-human or other causes. Consequently, thecredit rating determined on the grounds of such information does not constitute, explicitly or
implicitly, any representation or warrant of JCR on the information itself or any consequences of its
use in terms of accuracy, relevance, timeliness, wholeness, market value, or usefulness for any
specific purposes.

6

Use of Due Diligence Services of a Third Party in Taking the Rating Action as Required by Paragraph(a)(1)(ii)(F) of Rule 17g-7
There is no use of any third-party due diligence service in the determination of the credit ratingherewith presented.

7

Use of Servicer or Remittance Reports to Conduct Surveillance of the Credit Rating Required by
Paragraph (a)(1)(ii)(G) of Rule 17g-7
There is no use of any servicer or remittance report to conduct surveillance of the credit ratingherewith presented.

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8

The Types of Data Relied Upon for the Purpose of Determining the Credit Rating as Required by
Paragraph (a)(1)(ii)(H) of Rule17g-7
The information posted in the below, which includes data, is used for the determination of the credit
rating herewith presented.
A) Informational and explanatory materials published by the rating stakeholders with regard to theeconomy and fiscal management policy, etc. of the issuing governmentB) Statistics and reports published by an independent organization with regard to the economy andfiscal status, etc. of the issuing government

9Overall assessment of the Quality of Information Available and Considered in Determining theCredit Rating as Required by Paragraph (a)(1)(ii)(l) of Rule 17g-7
JCR holds its basic policies for securing the quality of information as a base of due diligence for thedetermination of credit ratings. The information used as a base for the determination of credit ratingherewith presented satisfies such policies, which include the publication by the issuer or someindependent media, etc.
JCR sees no particular weakness in the quality of information used for the determination of thecredit rating herewith presented as compared to the information used in other cases of the credit
rating for comparable issuers or ratable objects.
If the credit rating is an Indication, please see the report for Indication.

10 Information Relating to Conflicts of Interest as Required by Paragraph (a)(1)(ii)(J) of Rule 17g-7
JCR does not receive payment of compensation for the determination of the credit rating herewithpresented from either one of those parties who are issuer, underwriter, depositor or sponsor.
JCR did not receive in the last fiscal year in the past payment of compensation from the same party
for any kind of JCR’s service other than the determination of public or private credit rating, such as
one in the ancillary business.

or Measure of the Potential Volatility of the Credit Rating as Required by Paragraph
11 Explanation(a)(1)(ii)(K) of Rule 17g-7
A) Economic Base
The credit rating is subject to alteration if there is an improvement or deterioration of the issuer’s
economy or financial systems, etc. The resultant alteration of the credit rating is usually by a notch,with possibility of a few notches if and when the change is large.
B) Fiscal Base
The credit rating is subject to alteration if the issuer increases/ decreases its fiscal deficit/ surplus andits public debt and thereby makes given debt payment liability less/ more bearable. The resultant
alteration of the credit rating is usually by a notch, with possibility of a few notches if and when thechange is large.
C) External Positions
The credit rating is subject to alteration if there is a change in the issuer’s international balance of
payments and international investment position and thereby an improvement/ deterioration of its
liquidity positions. The resultant alteration of the credit rating is usually by a notch, with possibility ofa few notches if and when the change is large.

3/5D) Social and Political Bases and Economic Policy
The credit rating is subject to alteration if there is a change in the issuer’s social and politicalconditions or economic/ monetary policies, etc. and thereby an improvement/ deterioration of its
economy and fiscal positions. The resultant alteration of the credit rating is usually by a notch, withpossibility of a few notches if and when the change is large.
E) Related Parties’ Stance of Support/ Assistance for the Issuer
The credit rating is subject to alteration if there is a change in the credit enhancement provider or otherrelated parties with regard to their stance of support/ assistance for the issuing government and thereby
an improvement/ deterioration of its economy, fiscal positions and liquidity positions. The resultant
alteration of the credit rating is usually a notch, with possibility of a few notches if and when thechange is large.

F) Order of Seniority in Debt Payment
The credit rating is subject to alteration if there is a change in the rated debt’s status in the order ofseniority relative to other debts, due to improvement/ deterioration of the issuer’s fiscal condition
and/or will. The resultant alteration of the credit rating is usually a notch, with possibility of a few
notches if and when the change is large.
G) International Economies
The credit rating is subject to alteration if there is a change in the international economies, commodity
or foreign exchange markets, etc. and thereby, through international balance of payments, animprovement/ deterioration in the issuer’s fiscal balance or debt payment capacity. The resultant
alteration of the credit rating is usually by a notch, with possibility of a few notches if and when thechange is exceptionally large.
H) Various Events
The credit rating is subject to alteration on occurrence of various events, such as domestic unrest, war,
natural disaster, etc. which are unforeseeable at the time when the credit rating is determined, causing
a significant change on the issuer’s economy, fiscal positions, etc. The resultant alteration of the credit
rating could be by a notch but more often than not as much as a few notches.

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Information on the Content of the Credit Rating, Including the Historical Performance of the Credit
Rating and the Expected Probability of Default and the Expected Loss in the Event of Default as
Required by Paragraph (a)(1)(ii)(L) of Rule 17g-7
Historical records of the credit rating herewith presented are posted in the end of this paper.
The credit rating herewith presented by JCR is its summary opinion with regard to the likelihood ofgiven debt payment and hence not necessarily a perfect representation of such likelihood. The credit
rating is not intended to estimate the probability of default or the loss on given default, either.
Facts of the probability of default are posted as Form NRSRO Exhibit 1 on the JCR website under
the URL:
https://www.jcr.co.jp/en/service/company/regu/nrsro/on the Sensitivity of the Credit Rating to Assumptions Made as Required by Paragraph
13 Information(a)(1)(ii)(M) of Rule 17g-7
A) Economic Base
The credit rating herewith presented could be changed if and when the assumptions made at the timeof its determination turn out to be inaccurate with regard to the issuer’s economy or financial systems,
etc. The resultant change of the credit rating is most likely by a notch, as JCR speculates, but possiblyas much as a few notches if the development is rapid in improvement or deterioration of the issuer’s
economy or financial systems on some drastic change in environments, etc.
B) Fiscal Base
The credit rating herewith presented could be changed if and when the assumptions made at the timeof its determination turn out to be inaccurate with regard to the issuer’s fiscal conditions in terms ofannual balance or public debt. The resultant change of the credit rating is most likely by a notch, as
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JCR speculates, but possibly as much as a few notches if the development is rapid in improvement or
deterioration of the issuer’s fiscal condition on some drastic change in its economy.

C) External Positions
The credit rating herewith presented could be changed if and when the assumptions made at the timeof its determination turn out to be inaccurate with regard to the issuer’s liquidity positions reflecting
improvement or deterioration of the international balance of payments and the international
investment position. The resultant change of the credit rating is most likely by a notch, as JCR
speculates, but possibly as much as a few notches if the development is rapid in improvement or
deterioration of the issuer’s liquidity positions on some drastic change in the country’s economic/
fiscal conditions and financing activities, etc.
D) Social and Political Bases and Economic Policies
The credit rating herewith presented could be changed if and when the assumptions made at thetime of its determination turn out to be inaccurate with regard to the issuer’s social and politicalbases and economic/ monetary policies. The resultant change of the credit rating is most likely by
a notch, as JCR speculates, but possibly as much as a few notches if the country’s situation
changes drastically, making the issuer’s social and political bases and economic/monetary
policies significantly improved or deteriorated.
E) International Economics
The credit rating herewith presented could be changed if and when the assumptions made at the timeof its determination turn out to be inaccurate with regard to the prospects of the international
economies or commodity/ foreign exchange markets, etc. JCR expects the change should be most
likely by a notch but could be as much as a few notches, should the economy or the markets change sogreatly.
on the Representations, Warranties, and Enforcement Mechanisms of an Asset14 Information
backed Security as Required by Paragraph (a)(1)(ii)(N) of rule 17g-7
The credit rating herewith presented is not for an ABS product, and hence no relevant issue.

Japan Credit Rating Agency, Ltd.
Jiji Press Building, 5-15-8 Ginza, Chuo-ku, Tokyo 104-0061, Japan
Tel. +81 3 3544 7013, Fax. +81 3 3544 7026

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The Historical Performance of the Credit Rating
Issuer Name

Republic of Chile
Republic of Chile
Republic of Chile
Republic of Chile

Issue Name

Issuer(Long-term)(FC)
Issuer(Long-term)(FC)
Issuer(Long-term)(LC)
Issuer(Long-term)(LC)

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Publication Date

RatingOutlook/Direction

March 11, 2019
July 3, 2020
March 11, 2019
July 3, 2020

AAAAAAAA-

StableStableStableStableAttachment

Attestation Required by Paragraph (a)(1)(iii) of Rule 17g-7

I, Toshihiko Naito, have responsibility to this Rating Action and to the best of my knowledge:

A) No part of the credit rating was influenced by any other business activities.
B) The credit rating was based solely upon the merits of the obligor, security, or money market
instrument being rated.
C) The credit rating was an independent evaluation of the credit risk of the obligor, security, or
money market instrument.

Japan Credit Rating Agency, Ltd.
Jiji Press Building, 5-15-8 Ginza, Chuo-ku, Tokyo 104-0061, Japan
Tel. +81 3 3544 7013, Fax. +81 3 3544 7026