Peru Sponsors Ready Infrastructure Bond

Ecuadorian concession operator Hidalgo & Hidalgo, through its Peruvian subsidiary CASA, is heard close to launching bond financing for the fifth and final leg of Peru’s Interoceanica highways, or IIRSA Tramo 5. The dollar-denominated PPP bond is expected in the $200m size area, and will feature the basic characteristics of the CRPAO structure, in which Peru’s government guarantees payment on notes issued from a trust. BNP Paribas is leading the deal, having structured previous financings for Peruvian toll roads. The transaction – set to meet the same tough market conditions as all other LatAm issuers, as well as investor aversion to complex structured deals – is heard to include novel features like a delayed draw, which adds flexibility to the borrower’s access to funds. In a typical CRPAO structure, notes are issued from a trust and proceeds sit in a remote vehicle, which feeds cash in increments to the concessionaire as it meets construction milestones. Deutsche Bank has been active in these deals, completing at least one this year that was redistributed in the form of CLNs to EM institutional investors. In one transaction, Grana y Montero – the Peruvian developer – and JJC Contratistas raised $193m through a trust that has an 18.5-year life and can issue debt and derivatives.