Peru LNG Taps Local Market

Peru LNG, the sponsor building a giant LNG liquefaction terminal in Pampa Melchorita, Peru, has sold $200m in bonds across 4 tranches on the local market in what lead banks are calling Peru’s largest domestic bond in 5 years. The bulk of the deal involved $135.3m of 15-year bonds featuring an average life of 7.3 years and a 5-year grace period, paying 6-month Libor plus 3.656%. It also sold $10m in 2.5-year bullet bonds paying 3.438%, $30m in 5-year amortizing bonds with a 2.7-year average life paying 4.656%, and $24.7m of the same15-year bonds, but paying a fixed rate of 7.156%. Total demand topped $560m, including $342m for the Libor tranche, according to a statement from sole manager Banco de Credito de Peru. “The [deal] included an innovative placement mechanism designed by BCP that consolidated the books for tranches 3 and 4, thus increasing competition in the longer segment of the bonds, especially between the two largest investor groups: private pension funds and life insurance companies,” says BCP in a statement. The $3.9bn Peru LNG project is the largest ever infrastructure undertaking carried out in Peru, and is expected to start operations in June 2010. Sponsors Hunt Oil, SK Energy, Repsol YPF and Marubeni had previously funded it with equity and $1.25bn in loans from development and commercial banks signed in 2008.