The Project & Infrastructure Finance Awards review period overlapped significantly with the outbreak of the COVID-19 pandemic, disrupting business and increased the amount of uncertainty for getting deals done in the marketplace.
However, as Luis Fernando Perdigón, SMBC’s new head of Latin America, described the year as “probably the best that we have had, by far.” What drove that was the completion of several leading deals that had been building momentum for years, culminating in completion during the review period.
That is putting the pressure on his replacement, David González, who now heads up the project and infrastructure division at the Japanese bank.
“I’m in a very difficult position,” González said, only slightly joking as the two participated in a joint telephone interview with LatinFinance.
“Looking ahead it is going to be challenging. The strategy is to get closer to projects from the beginning,” González said, adding: “You look at sponsors on the surface and might just turn them down, but now it is really let’s figure out how to make projects work instead of turning them down.”
One project that was dear to their hearts and also a winner for this year’s PIF Financing – Andes category, was the Ergon Peru $222 million private placement green bond that helped to refinance the world’s largest rural electrification project. The deal sponsors are Italy’s Tozzi Green (90%) and Gardini 2002 S.R.L (10%) with the money going toward the implementation of small-scale photovoltaic systems that will power remote areas of Peru.
“We picked up this project three years ago. It was an Italian sponsor without a lot of banking relationships in Latin America. We really helped them with the original financing. Helped them figure out the structuring and the handholding,” Perdigón said.
“When it was successful, we had our guys 4000 meters above sea level looking at it and they came back shocked. They really felt they were changing the lives of people because if they didn’t get this equipment they would never have electricity. There never would have been an electric line,” he said.
This is SMBC’s fourth straight year of winning the PIF Bank of the Year for Latin America, once again proving the strength of its project and infrastructure practice. However, it was not an open-and-shut case as the margin of victory was extremely thin given the quality and quantity of nominations in this category.
SMBC worked on the Autopista al Mar 2, a $650-plus million transaction, that was part of the Project Sponsor of the Year Category winner, involving a complex legal structure and a last minute jurisdictional change due to geopolitical ructions.
The firm was also involved in the $1.1 billion MV24 FPOS transaction that won the 2020 PIF Bond of the Year category.
While the deals may have slowed temporarily in the spring due to the pandemic, Perdigón said that operations, while accounting for the health requirements, are practically back to normal. Markets are functioning and deals are getting done. The pandemic initially took the momentum out of the market, but it returned by July and certainly by August.
Looking again though, there will likely be some changes in the PIF pipeline.
“Countries will have to be more careful about their fiscal situation and maybe this creates a little bit of a cap on infrastructure spending and the market overall. But for banking? I think banks continue to invest in LatAm and most of our competitors remain active,” he said.
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