Traffic in Panama tends to get coverage when it concerns ships going through the Panama Canal, but not so much when it’s about vehicles driving over the canal.
Road traffic, however, is a big deal for the country – not least for its negative economic and environmental impacts. According to a 2024 World Bank report, Panama City ranks fourth as the most congested city in Latin America.
Midway through the last decade, Panama’s then government address the congestion by adding a new bridge – the fourth – over the canal. The project has gone through substantial modifications and Panama is now on its third president since the bridge contract was awarded in 2018, but it is now moving ahead.
A consortium formed by China Harbour Engineering Company and China Communications Construction Company won the bid to build the bridge six years ago. The original plan, designed by then-President Juan Carlos Varela’s government (2014-2019), included the bridge and a segment of Line 3 of the Panama City Metro that would run parallel to it, over the canal.
Former President Laurentino Cortizo (2019-2024) subsequently switched things, separating the bridge and Line 3, which was awarded separately and, instead of going over the canal, is now going under it. More importantly, the Cortizo government changed the financing structure. The bridge was no longer a public works project with a line item in the budget, but a project that required the consortium to finance it.
The government of newly-inaugurated President José Mulino, who will be in office for the next five years, has expressed his full support for the project, which is now set for completion in 2028 with a total contract cost of $2.14 billion.
Deputy manager of China Harbour Engineering Company Americas Jennifer Croston, who has worked on the project since it was awarded in her dual role as deputy manager of the consortium that will build the bridge, Consorcio Panamá Cuarto Puente (CPCP), says: “We went through interesting stages until reaching financial closure. It was extremely complex, but we now have it done.”
In the end, the project was financed in April through a $1.5 billion dual-tranche milestone-based infrastructure bond. The complex structure called for the bond to be issued via a special purpose vehicle that will use the net proceeds of the offering to buy from the sponsor consortium work progress receivables which are pegged to milestones related to the project’s completion.
The transaction, coordinated by Japanese bank Mizuho, featured a $119 million tranche tied to the work-related receivables and a Rule 144A/Reg S tranche for $1.4 billion.
Another novelty was participation of the government in the financing plans: the Ministry of Finance and Ministry of Public Works were actively engaged throughout the process, in a departure from prior precedent. This is because of the strategic importance of the initiative in improving connectivity between Panama City and the rest of the country while easing daily gridlock for residents of the capital.
“The new government is very committed, which is very positive,” says Croston. “We are on the right path.”
Fourth Bridge Over the Panama Canal
$1.43 billion Financing
Sponsors: Consorcio Panamá Cuarto Puente & China Harbour Engineering Company Ltd.
Sole Bookrunner, Joint Structuring Agent: Mizuho
Local Placement Agent, Local Structuring Agent: Banistmo
Lenders’ Counsel: Arias, Fábrega & Fábrega (ARIFA); Latham & Watkins
Sponsor’s Financial Advisor: ARGO Finance Partners
Sponsor’s Counsel: Norton Rose Fulbright; SIGMA International & Global Market Attorneys
All supporting financial institutions and law firms were transmitted to LatinFinance by the award category winners. For updates please email awards@latinfinance.com