Abengoa Project Preps Bond Takeout

Abengoa Cogeneracion Tabasco (ACT) is heard to be preparing investor meetings this week via Credit Suisse for an up to $600m senior secured 2032 bond, after Fitch and S&P assigned a BBB minus ratings to the offering. The bulk of financing is expected to take-out bank debt, while the remainder will cover construction costs to build a gas fired co-generation plant that will operate within a complex owned by Mexican state-owned oil company Pemex (BBB), which is the sole off-taker. ACT is a special purpose vehicle owned by subsidiaries of Spain’s Abengoa and GE Capital. In 2009, both companies signed a 20-year PPA with Pemex to construct, operate and build the facility that is expected to cost $743.5m, $143.5m of which comes from the sponsors in the form of equity. In 2010, Abengoa closed a $460m 7-year loan to build the 300MW facility through structuring and syndication agent Santander. The facility pays a step-up spread starting at Libor plus 412bp for the 36-month construction period, and rising to 437bp through month 48, 462bp through month 60, and 562bp through month 78. The project is expected to be completed in September next year. According to a person familiar with transaction, about $367m of the bond’s proceeds will pay outstanding bank loans, about $79m will cover an engineering, procurement and construction (EPC) contract, $44m for interest payment during the project construction, $23m for the service reserve account, and $65m for swap termination costs and a letter of credit agreement. As positives, Fitch cites the low completion risks, as well as sponsorship from companies with a strong track record in this area.