Taboada Raises Wastewater ABS

The Taboada wastewater treatment plant in Lima has closed a PES942m ($340m) ABS. The three-tranche deal was placed mainly with local market investors, bankers say, but also saw some international participation. The bonds priced at par and pay the VAC – an inflation measure linked to the IPC inflation index – plus 5.965%. This is just inside of inflation plus 6.0% area indications investors had received previously. It comes in line with the inflation plus 5.2% yield seen last year on a similar PES320m transaction for the Huascacocha water treatment facility, once increases in yield in Peru’s government bonds since then are taken into account, according to investors. The BBB rated transaction is divided into a PES572m 2029 tranche, a PES220m 2033 tranche and a PES150m 2033 tranche. Despite the different maturities, the yield is the same for each of the three tranches, the banker says, as they were marketed to investors with different risk profiles. The amounts differ slightly from the PES923m total deal that had been estimated in presale ratings reports. To help fund construction of the plant by Spain’s ACS, Taboada will sell bonds backed by future revenues from its contract with Peru’s state-owned water utility company Sedapal, according to a Fitch report. 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 paym