Financing one of Chile’s largest infrastructure projects — the Interchile transmission line — brought together one of Latin America’s largest power companies and a diverse group of international lenders.

The large debt package marked the debut of Colombian power generator Interconexión Eléctrica (ISA) in the international project finance market and its first contract in Chile.

Six lenders – BancoEstado, BBVA, Crédit Agricole, Mitsubishi UFJ Financial Group, Natixis and Sumitomo Mitsui Banking Corp. – led a 15-year $737.56 million loan and a 15-year $33.19 million letter of credit facility. A four-year $95.76 million VAT facility with local players BancoEstado and Banco BICE rounded out the financing package signed in February.

Initially, the six lenders planned a club deal. But a year of negotiations enabled them to syndicate financing among a larger group. 

Spanish banks Banco de Sabadell and Caixabank were joined by German institutions KfW IPEX-Bank and Siemens Financial Services.

Carlos Alberto Rodríguez López, vice president for corporate finance at ISA, says the deal serves as a harbinger for the Baa2/BBB/BBB+ rated Colombian company. 

“It took us about two years to reach a consensus and ensure the structure was bulletproof enough to guarantee repayments on the loan,” he says.

After negotiating with key commercial financiers, ISA began construction on the transmission line earlier this year and drew down its first disbursement in May.

Lenders had to get comfortable with projected start dates for the construction and needed confirmation of revenue guarantees, Rodríguez adds. 

“The commercial risk is low and the revenues are guaranteed by the state,” he says.

Chile is a key market for ISA. It operates toll roads and telecommunications infrastructure there, but Interchile signals the company’s intent to grow its power generation portfolio. 

Interchile operates 917 kilometers of transmission lines covering five regions in Chile, connecting the central power grid with the northern grid, the country’s two largest power markets, Rodríguez says. LF

WINNER: Interchile

PROJECT: Interchile


FINANCING TYPE & SIZE: $866. 4 million debt, including $738 million loan, $33.2 million letter of credit facility, $95.8 million VAT facility 

BANKS: BBVA, Natixis,  Crédit Agricole, BancoEstado, SMBC, MUFG, Banco Sabadell, CaixaBank, KfW IPEX-Bank, Siemens Financial Services

LAW FIRMS: Barros & Errázuriz Abogados, Brigard Urrutia,  Mayer Brown, Milbank, Morales & Besa