The past year was not the easiest for infrastructure financing in Latin America, but Spanish bank Santander yet again held firm, playing a leading role in a significant number of the region’s most impressive transactions and, in doing so, demonstrating once more the reach and clout of its operations.
Benoît Félix, global head of structured finance at Santander CIB, points to an unenviable backdrop over the past twelve months, with the infrastructure market having broadly adopted a “wait and see” approach in the wake of both regional and global economic and political pressures.
This was hardly just a Latin American phenomenon, given prolonged monetary tightening in the US coupled with persistently stubborn inflation globally, not to mention ongoing geopolitical instability.
But there were nevertheless a number of landmark deals underway that required the attention of banking and capital markets – and in Latin America, Santander was consistently in the thick of the most noteworthy activity.
“The drop in the number of deals was compensated in a certain way by the size of some transactions, such as the MIP acquisition of Iberdrola assets and the Mayakan pipeline in México, and the Aegea project finance in Brazil,” Félix says. Santander participated in all three transactions – each one a ground-breaking effort mobilizing billions.
But that was not all: the Spanish bank’s fingerprints were everywhere in the region, as it was involved in deals across markets and jurisdictions.
Despite generally sluggish deal-flow in the Andes, for example, Santander, which also wins the award for Infrastructure Bank of the Year: Andes, demonstrated its readiness to pounce on the opportunities as they arose. This included a $1.39 billion acquisition by sustainable infrastructure investor Actis of a portfolio of clean energy assets from Enel in Peru, where the bank was joint lead arranger and joint bookrunner; and the $710 million refinancing of the Pamplona-Cúcuta highway in neighboring Colombia.
Félix says that the Colombian marketplace is likely to continue to move slowly, but Peru should provide new opportunities for investors and financiers, especially as the country’s official bodies take a more active role in promoting investments.
“There has been a change of mood and Peru’s rating continues to be very good,” he notes.
Félix points out that projects in sectors such as mining and transport infrastructure should hit the market soon. In a positive sign, the long awaited Anillo Vial Periférico concession was finally granted to a consortium of Spanish companies in April. Santander will act as financial advisor for Sacyr, Ferrovial and Acciona in the $3.4 billion project.
“People want to go back to Peru, a country that has a very good risk profile and where the market likes the structure of projects,” Félix says. “In six months or one year, more projects should be adjudicated.”
Further south, Santander was global coordinator of a $1.1 billion refinancing of the Anna Nery FPSO in Brazil. In the $633 million long-term financing of the renewable energy Babilonia Central project in Brazil, Santander was financial advisor and lead provider of letters of credit. The firm also had a hand in the financing of a seawater pipeline to support the expansion of Antofogasta’s Minera Centinela in Chile.
Félix expects that market conditions will improve for infrastructure financing in several Latin American markets in the coming year, and should continue to be strong in Brazil, which has continued to be an outlier in the region. If that is indeed the case, the Spanish bank is eager to make the best of the opportunities to come.
“We have been hiring bankers from other entities in the US, and part of this new team will help to develop our franchise in Latin America,” Félix says. “We will continue to propose our advisory services, as well as lending and capital markets, as our new capabilities make us the natural player to help infrastructure projects to raise capital.”