Pricing Emerges on FARAC Peso Jumbo

Pricing is out on a $3bn equivalent in Mexican pesos loan for the FARAC toll road. The biggest local currency syndication to date is a 7-year stepping up from 165bp over Libor in year one to 185bp in years two and three, 200bp in years four and five, and 225bp in years six and seven, say people familiar with the issue. Santander underwrote the deal and is leading syndication while joint-bookrunners Dexia and NordLB have committed to $500m each. MLAs are being asked to purchase tickets of $300m for an up-front fee of 100bp and a 10bp underwriting fee. The loan is heard to have no rating, following speculation that it would be high grade to sell to domestic pension funds. Bank market participants say the transaction, which will set a benchmark for the next toll road financing, is well structured. But there is some concern about the feasibility of such a large volume, understood to be the biggest project deal in LatAm to date. Participating banks may struggle to obtain the pesos necessary to commit to the tickets, say bankers away from the deal. And this is just the first of at least five such auctions that will surely involve similar financing structures, meaning banks will look to keep some dry powder. The bank meeting in New York Thursday was heard well attended, following launch Tuesday in Mexico City. ICA and Goldman Sachs Infrastructure Partners are running the toll road project.