Winner: Tocumen Airport $1.85 billion 2041 & 2061 Notes Offering
The Panamanian government’s Tocumen International Airport is no stranger to the international bond market, regularly issuing paper to finance expansions.
While its placements have always gained attention, its dual-tranche deal in August 2021 was a cut above the rest. It raised just shy of $1.9 billion, providing the company with needed liquidity as its recovered from the pandemic and offering relief by extending the maturity of existing bonds.
The success of the offering, which was oversubscribed four-fold in only 45 minutes, wins Tocumen the Quasi-Sovereign Bond of the Year award.
The transaction was the largest issuance in Panama with the exception of the sovereign, and achieved the lowest yields to date. It allowed the company to buy back 2036 and 2048 notes, giving it needed breathing room. Amortization of the new bonds will not start until 2027.
A full 98.4% of holders of the 2036 bonds agreed to sell their notes, while 88.09% of the 2048 holders did the same.
The first tranche was for $555 million in 15-year bonds maturing in 2041. The coupon was 4%. The second tranche was for $1.3 billion in 30-year bonds due in 2061. The coupon was 5.125%. The second tranche is among only a handful of infrastructure bond globally with 30-year or greater tenure.
The company used the funds for liability management, paying debt and for a Covid recovery account.
Bank of America, one of the bookrunners, said that Tocumen was able to raise new money to “reshape their debt with new indebtedness, extending the life of notes, thus better aligning the amortization profile of the bonds to the flows of the airport.”
The airport is benefitting from a slow return to normalcy in travel and Panama’s economic recovery. Tocumen is a hub for Latin American travel.
Passenger traffic at Tocumen reached 1.2 million in December, a nearly 10% increase from the previous month. It saw 9.2 million passengers during the year. This was close to double 2020, the pandemic year, but only 55% of the traffic in 2019.
The airport ended 2021 with 21 airlines and slightly more than 80% of the destinations it serviced prior to the pandemic.
“The results from December and 2021 in general were better than our initial projections,” Tocumen CEO Raffoul Arab Pinzón said in a statement.
The airport will benefit from Panama’s better-than-expected economic recuperation. The country scored its all-time growth rate in the second quarter of 2021, with the economy jumping by a huge 40.4% compared to the same quarter the previous year.
The year-on-year forecast for 2021 is 15%, with forecasts for 7% this year. Fitch Rating in late January confirmed Panama’s BBB- rating, and changed the outlook to stable from negative. – LF