Category: Structured Finance

The IDB has approved a $70m loan for Uruguay to be used to regularize and improve 25 informal settlements and two semiformal areas, benefitting more than 7,300 households. The loan has an amortization period of 25 years, a grace period of 5 years and a variable interest rate.

The IDB has approved a loan of $350m for Mexican infrastructure and public services projects, the first from a $1.2bn line of credit. Funds will be disbursed through development bank Banobras to Mexican state and municipal governments and public service providers to finance priority investments in infrastructure, public services and strengthening institutions. The $350m loan is for 20 years, with a 5-year grace period and an undisclosed Libor-based interest rate. Banobras will use the IDB funding to supply medium and long-term loans and credit guarantees, as well as technical assistance. In order to finance small-scale projects such as potable water systems, street lighting or road paving in rural municipalities, Banobras will also be able to rediscount its own portfolio using funds from the IDB loan.

The IDB has approved a $45m loan to the Mexican government of which the local counterpart will contribute $10.4m from sales tax revenues. The loan has an estimated disbursement period of 54 months and a Libor-based interest rate, the IDB says. The funds, says the bank, will be used to improve the quality of public expenditures through the implementation and consolidation of a new results-based budgeting system.

The IDB has agreed a conditional 20-year credit line worth up to $500m for Brazil to finance a program to help states modernize and integrate their fiscal, financial and asset management systems. Ceara will be the first Brazilian state to benefit, with a $41m 20-year loan that has a 4-year grace period. The credit line, will be available to the Brazil government for 10 years and will fund training, consulting services, reform and upgrading of operational and taxpayer service units, as well as the purchase of equipment such as information technology hardware, systems and materials.

Brazilian steelmaker Usiminas is in Tokyo looking to syndicate an up to $350m 8-year B loan through SMBC. The B portion, part of an IDB A/B facility, is being targeted solely at Japanese banks for just 75bp over Libor. That spread seems unrealistically low for a market in which many European and US banks are funding themselves at 100bp-150bp over Libor. But people close to the matter say large Japanese banks such as Mizuho and Tokyo-Mitsubishi (BTM), as well as smaller Japanese institutions, have very close ties to Usiminas through relationships with its largest shareholder Nippon steel, which is accompanying Usiminas at Tokyo bank meetings. The company wants to lean on those ties to squeeze out a margin that is by all measures below market. Earlier this year, SMBC is heard to have won the mandate by promising to deliver Libor plus 75bp, which surprised others that pitched. A banker on the deal declines to comment on margins and fees. But people close to the borrower acknowledge it is shooting for 75bp, though they concede that level may not necessarily be achieved. The IDB is also providing a $50m 10-year A loan, its first to be denominated in yen. Proceeds are for a new power plant near an Usiminas facility in Minas Gerais. Last month, Usiminas clinched a 2-tranche BRL493m 7-year facility at 176bp over TJLP and a basket of currencies. In September, it raised $550m through a JBIC A/B loan, $275m of which was syndicated to a club made up of SMBC, Mizuho and BTM. In February, the steelmaker obtained $1.3bn in a 2-part syndicated loan via HSBC, with 5 and 7 year tenors on a trade facility paying Libor plus 110bp and 135bp respectively, as well as a 2-year liquidity facility at Libor plus 75bp. And in June 2007, it raised a $300m 5-year standby facility via Calyon and HSBC at 25bp over Libor out of the box.

The IDB has agreed just over $500m in loans for Peru and Argentina. The package includes a $200m loan to expand potable water and sanitation services in the Buenos Aires metropolitan area and suburbs, to be executed by Agua y Saneamientos Argentinos. It is the first loan from a $720m conditional credit line for investment projects, and the project is part of a wider expansion program which seeks to add 1.5m users to the water service and 1.4m to the sewer system between now and 2011. Separately, the IDB is helping Peru’s SENASA plant and animal health service carry out a $305m investment program designed to raise the competitiveness of agriculture. The deal includes a $175m 15-year conditional credit line, including an initial loan of $15m and Peru’s government will contribute $130m.

Portugal has signed a letter of intent with CAF to become, as quickly as possible, a shareholder in the Andean multilateral, the latter states. Portuguese finance minister Carlos Costa notes the increasing strategic importance of LatAm to the European nation. CAF president Enrique Garcia says the agreement is part of the multilateral’s strategy of growing its borders towards Europe and Asia. He adds that amid the global financial crisis, it is crucial to reestablish confidence that reopens normal financing channels and minimizes risk aversion. CAF already has 17 members, all but Spain from LatAm.