Panama Says Canal Expansion on Track

The Panama canal’s $5.25bn expansion program is proceeding on-time and on-budget, says the Panama Canal Authority’s (PCA) vice president of research and market analysis Rodolfo Sabonge. “We have gone through world wars, Asian flu, the Iraq war, and other economic and financial upheavals in the world, but we have and continue to weather all the challenges that come our way,” Sabonge tells a shipping conference in Singapore. The PCA said in October that it would borrow $2.3bn from 5 multilaterals, clinching the funds as other infrastructure projects in the region see delays. The $2.3bn package has a 10-year grace period and breaks down into $800m from JBIC, $500m from the EIB, $400m from the IDB and $300m each from the IFC and CAF. According to PCA CEO Alberto Aleman, it is paying an average effective interest of 5.48%, with spreads over Libor on the different loans in the package of 48bp-120bp, stepping up to 140bp. Multilateral officials see the Panama canal project as high quality and important to the region. Mizuho is financial advisor to the PCA. “As with any business during this time of economic uncertainty, we are monitoring trends and adjusting where necessary to ensure that we are maximizing all of the canal’s resources,” says Sabonge. “Recent traffic statistics show that transits through the canal have remained fairly constant. Vehicle carriers represent the principal segment mostly affected by the credit crisis, but our projections are already indicating traffic increases for next year,” he adds.