Bond investors are showing a renewed interest in financing Latin America’s infrastructure. But bank lending still offers advantages that the markets cannot. By Joti Mangat
Category: Project & Infrastructure Finance
Posted inMagazine
Infrastructure report: Peru: Stop and go
A number of large infrastructure projects are due to be financed in Peru this year. But they will first have to overcome a number of hurdles.
By Karen Schwartz
Posted inDaily Brief
Hydro ABS Approaches Pricing
The Reventazon hydroelectric project sponsored by Costa Rica’s Instituto Costarricense de Electricidad (ICE) has opened bids from investors for a planned $415m cross-border corporate securitization of a project loan, according to people familiar with the plans. The 20-year senior secured RegD/RegS notes, issued by the Reventazon Finance Trust (RFT) entity, are backed by a 100% participation interest in a 20-year B-loan from the Inter-American Development Bank (IDB), according to ratings reports. Allocation of bids was expected to take place during the early part of this week, with settlement to take up to a month. The B-loan is part of the secured debt which finances the design, construction, future operation and maintenance of the 305.5 megawatt Reventazon hydroelectric power plant in Costa Rica. The project has been structured so that construction, operation, and other risks are covered by ICE. The notes begin amortizing in 2017, and benefit from a debt service reserve account equivalent to the next principal and interest payment due amount. BNP Paribas is managing the transaction, rated BBB minus/Baa3 and which was aiming to complete pricing this month. The total project cost is $1.4bn, according to the IDB, with funding also coming from a $475m equity contribution from ICE, a $200m IDB A-loan, $100m IFC loan and $218m in domestic bank debt, according to Moody’s. Reventazon is expected operational in 2016.
Posted inDaily Brief
Peru Power Plant Completes Project Bond
Planta de Reserva Fria de Generacion de Eten, has raised $132.8m through a novel project bond, according to people familiar with the transaction. The Peru-based power generation company’s 20-year partially guaranteed bond priced at par with a 7.65% coupon and closed this week. The senior secured notes come with a 20% credit guarantee from development bank CAF. Proceeds will be used to finance a 20-year concession to build and operate the 223 megawatt Eten simple-cycle natural-gas fired power plant in Peru’s Chiclayo province. BTG Pactual was sole lead on the RegS-only transaction, rated BBB minus/BBB minus. The project will provide a reserve electricity source to Peru’s National Interconnected Electricity Framework (SEIN) for periods of increased demand or shortage of supply. It will also provide energy in circumstances where it is more efficient for the SEIN to receive energy on a reserve, standby basis. The project is sponsored by Cobra Peru, a unit of Spain’s ACS, and EMCE. The transaction represents LatAm’s first international greenfield project bond, first power plant project bond and first international project bond with a partial credit guarantee, according to DLA Piper, counsel to BTG Pactual.
Posted inDaily Brief
Power Project Prices Infrastructure Debenture
Sponsors of the Termeletrica Pernambuco III power project have set the pricing for the sale of BRL300m ($129m) in domestic bonds qualifying for preferential tax treatment under Brazil’s infrastructure debenture legislation, according to regulatory documents. The four series of 2025 inflation-linked debentures vary slightly in their amortization schedule and will pay 9.11%. The issuer is raising funds to repay BRL270m debt to Caixa Economica Federal. Itau is managing the transaction. The BRL450m 201MW oil-fired plant is located in the northeastern state of Pernambuco.
Posted inWeb Articles
BNDES eyes smaller infrastructure funding role as debentures pick up
Some 10 billion reais in project bonds are in the pipeline for 2014, says Luciano Coutinho
Posted inDaily Brief
Peru Power Plant Targets Project Bond
Sponsors of the Eten power project in Peru are planning to raise $145m through a senior secured bond due 2034 to fund construction, according to Fitch, which assigns a BBB minus rating. The Planta de Reserva Fria de Generacion de Eten project is sponsored by Cobra Peru, a unit of Spain’s ACS, and EMCE. The senior secured notes come with a 20% credit guarantee from development bank CAF. The 223 megawatt simple-cycle natural-gas fired power plant will be located in Peru’s Chiclayo province, and was awarded to a consortium comprised of Cobra and Enersa in 2011. BTG Pactual is managing the transaction.
Posted inDaily Brief
Chubut Prices Hydrocarbon-Backed Note
Argentina’s Chubut province has sold $220m in 2019 dollar-linked bonds backed by oil revenues, according to people familiar with the transaction. The bond priced at par with a 4.0% coupon, and saw demand of $318m. Chubut’s notes are guaranteed by taxes the province gets from oil exports, and are raising proceeds for infrastructure funding, mainly community centers and hospitals. Puente was lead bookrunner and BNP Paribas and Banco del Chubut as co-bookrunners on the deal, rated A on a national scale. The province last issued dollar-linked bonds in 2010, and has previously issued debt locally and abroad with hydrocarbon guarantees. The transaction follows a $198m 2018 deal for Argentina’s Neuquen province last week, at 3.9%, led by Banco Galicia and Macro.
Posted inDaily Brief
External Crises Sharpen Domestic Focus: Cardenas
The QE stimulus unwind and debt ceiling talks in the US mean emerging economies can’t count on a favorable external environment, Colombian Finance Minister Mauricio Cardenas tells LatinFinance, particularly against a backdrop of lower commodity prices and reduced FDI potential. “I am fully convinced that we need to prioritize a more ambitious program of domestic investment to offset a weaker external environment. If we want to grow 4%-5% per year, we need to focus on the domestic side,” Cardenas says. The need to boost his country’s economic self-reliance was clear, as policy talks at the IMF’s annual gathering were overshadowed by the threat of a US sovereign default. “It would be naive to ask for the US authorities to incorporate reactions of other countries [into their decisions]. At the end of the day, decisions will be made with other priorities in mind,” he says. Foremost on the domestic agenda is a redoubling of efforts to boost investment in critical infrastructure. Cardenas says Colombia’s potential growth rate could hit 6.0% if talks with FARC rebels prove successful and lead to an economic “peace dividend,” and if targeted infrastructure investments proceed to plan. Authorities aim to use proceeds from the sale of the government’s 57.7% stake in generator Isagen to stimulate private financing for the $25bn in “fourth generation” road concessions it is in the process of awarding. Colombia expects to receive more than $3bn for the stake, with proceeds going to the newly-created Fondo para el Desarrollo Nacional (FDN), which can offer subordinated debt, guarantees and other credit enhancements. The minister said the goal is an entity in the mold of Mexico’s Fonadin, rather than Brazil’s BNDES. “The strategy to deal with the external circumstances is to mobilize funds from one sector to another,” he says.
Posted inDaily Brief
Chubut Pricing Carries into This Week
Argentina’s Chubut province is expected to finish pricing a domestic bond sale of at least $50m Tuesday, say people familiar with the deal. The province could offer as much as $380m of the 2019 dollar-linked notes, which had been scheduled to price Friday. With the province still closing the books late on Friday and Monday a national holiday, the bonds, guaranteed by taxes the province receives from oil exports, are set to price Tuesday. Proceeds from the sale will be used for infrastructure funding, including for community centers, schools, roads and hospitals. Puente is the lead bookrunner, with co-bookrunners BNP Paribas and Banco del Chubut. The province last issued dollar-linked bonds in 2010, and has previously issued debt locally and abroad with hydrocarbon guarantees.