Year: 2021

Winner: Empresa de los Ferrocarriles del Estado (EFE)

The record low for a 30-year coupon in Latin America in 2020 came from an unexpected source: Chile’s national railway company.

Known today as EFE-Railways of Chile, the quasi-sovereign issued its first ever international bond in August 2020 with a coupon of just 3.068%. The previous low, by the Chilean sovereign was 3.5%. The low rate and market debut earned EFE the infrastructure financing of the year award for the Southern Cone.

Cecilia Araya, EFE’s administrative and financial manager, says the success reflects the company’s management and plans, as well as the enduring confidence in the sovereign’s macroeconomic management.

“We believe the [bond] emission was very successful, taking advantage of the high liquidity in the market and appetite for bonds with a risk similar to that of the sovereign debt,” she tells LatinFinance.

The deal’s success is also linked to the broader move toward improving public transportation within the context of sustainable development and efforts to mitigate climate risk.

The bond forms part of a $5.55 billion plan, “Chile on Rails,” the Chilean government has announced to transform the company. The goal is to double the amount of cargo shipped and triple the number of passengers transported annually to 174 million by 2027. The first step is receiving 15 new trains this year acquired from China that will be in the country at the end of year.

The company began replacing equipment this year in the Biobío and Araucanía regions, two of the most populated areas in the country, and has started work on a local train service for the Santiago metropolitan area, including the capital city.

“The bond is part of our financial strategy that includes diverse sources of long-term financing in line with the company’s investment strategy. We envision obtaining additional resources from the bond market, as well as from local and international banks,” says Araya.

EFE has already announced plans for a second $500 million bond and has started talks with international financial institutions to secure credit lines for investment plans. 

“We believe the [bond] emission was very successful, taking advantage of the high liquidity in the market and appetite for bonds with a risk similar to that of the sovereign debt”  Cecilia Araya, Finance Manager, EFE

SPONSORS:

Empresa de los Ferrocarriles del Estado (EFE – Chile)

BANKS:

Joint Coordinators: Santander, Goldman Sachs

LAW FIRMS:

Davis Polk, Garrigues, Skadden Arps

All supporting financial institutions and law firms were transmitted to LatinFinance by the award category winners. For updates please email awards@latinfinance.com