Taboada ABS Set to Close

The Taboada wastewater treatment plant in Lima is expected to close a PES923m ($334m) ABS as soon as today, according to a banker on the deal. The issuer has set a yield of the IPC inflation index plus 5.965%, and will look to close this week. This is in line with 6.0% area indications investors had received earlier. The transaction is divided into a PES448m 2026 tranche, a PES375m 2033 tranche and a PES100m 2033 tranche, according to Fitch, which rates the transaction BBB on an international scale. Despite the different maturities, the yield is the same for each of the three tranches, the banker says. To help fund construction of the plant by Spain’s ACS, it will sell bonds backed by future revenues from its contract with Peru’s state-owned water utility company Sedapal. The proceeds of the issuance will be used to purchase retribucion por inversion (RPI) payments from Taboada, for the funding of reserve accounts, and for transaction expenses, Fitch explains. The RPIs are denominated in PES and are periodically adjusted for inflation. Taboada will build the plant and receive Certificados de Avance de Obras (CAOs) from Sedapal as certain construction milestones are reached. The CAOs originate the RPI payments, and the issuance of an individual CAO gives the owner the right to receive 80 equal consecutive quarterly fixed payments (RPICAOs) in proportion to the overall work completed. The RPICAOs will then be sold to the Taboada Finance Limited special purpose vehicle. The RPICAO payments are guaranteed by Peru’s government. The first 2 tranches will be funded at closing, while the final tranche may be drawn only after project completion. Construction is expected to be completed in 3 phases, finishing July 2013. BNP Paribas is managing the sale.