Peru Insurer Nears Structured Deal

Peruvian government-backed health service EsSalud is scheduled to price a $230m 2029 structured finance transaction today, after books went subject Wednesday. “The book is well oversubscribed with some large orders and good accounts participating,” says a person familiar with the sale, noting that Peruvian investors are expected to comprise half of the deal. The zero-coupon bond, issued through the Peru Payroll Deduction Finance special purpose vehicle, will help fund construction projects, using a structure similar to that which Preuvian road operator IIRSA used in 2008. The deal is backed by certificates to receive payments from EsSauld related to the construction and equipment provision of 2 hospitals and 2 medical distribution centers in Lima. The certificates provide future cash flows in aggregate of approximately $230m. The certificates will be purchased by the special entity, with the expected proceeds of $150m at the present value discounted at a yield to be determined at pricing. Guidance for this yield has been set at 5.5%-area. The payments are guaranteed by the future flows of mandatory deductions from the payrolls of Peruvian workers made by EsSalud. Bank of America Merrill Lynch is managing the sale, rated BBB minus.