LatinFinance - July/August 2016 - 20

COLOMBIA
INFRASTRUCTURE

After months of delays in closing financing packages for the first 4G
toll road concessions, authorities are confident the process is gaining
momentum. By Rodrigo Amaral

Gearing up

mplementing a market-based system to finance infrastructure projects in Colombia
has not been easy, but financing the fourth generation (4G) of toll road concessions is beginning to move forward.
Three of the 27 projects awarded have reached financial close this year, and the government hopes that more roads will get funding at a pace of one every month. So far, each deal
has taken at least six months longer than expected to close.
But authorities are optimistic they have found some momentum.
Local banks have committed to providing about half the financing for the first round of
projects, while international lenders from Goldman Sachs to the Inter-American Development Bank (IDB) and private investors, such as Colombia's pension funds, have taken on a
substantial role.
"We expected the first wave of projects would be financed basically by local banks," says
Clemente del Valle, chief executive of national development bank Financiera de Desarrollo
Nacional (FDN). "That we have managed to involve not only local banks, but also multilateral
organizations and international banks has been a victory for us."
Without the involvement of foreign investors, financing the first round of 4G projects may
have taken even longer to advance. Colombian lenders expressed doubts about the financing
conditions, and the banking association Asobancaria requested a number of changes to the
rules so local lenders could take on a bigger role.
As construction companies sign turnkey contracts with the sponsors, banks have requested guarantees that the projects will ultimately reach completion. The introduction of a
new completion bond-like product from insurance company JMalucelli Travelers was crucial

Done deal
4G roads that have reached financial close
Project name

Total debt

Type of debt

Concessionaire

Pacífico 3

$832m

Bonds ($377m)
Loans ($266m)

El Cóndor (48%), MHC (26%), Meco (26%)

Perimetral de Oriente

$443m

Loans

Shikun & Binui

Pacífico 1

$841m

Loans

Covipacífico: Episol (49.9%), ACS (40%),
CFC-SK Capital (10.1%)

Autopista CartagenaBarranquilla

$350m

Bonds ($150m)
Loans ($200m)

Costera: Colpatria (30%), MHC (30%), Meco
(30%), Castro Tcherasi (10%)

Sources: LatinFinance, ANI, Goldman Sachs

20 L ATINFINA NCE.COM - July/August 2016

in securing the financing for the first three
roads, says Luis Fernando Andrade, head
of the Agencia Nacional de Infraestructura
(ANI).
Now, ANI is discussing with the market
how to get the insurance industry more
involved in the process and provide guarantees for lenders and investors. Asobancaria
has also asked the government to raise the
lending limits for the projects.
As it stands, local banks can lend up to
25% of their technical reserves to 4G toll
roads. The association also wants more
guarantees that the concessions will not
face liability for environmental issues in the
future, which could hinder the ability of
sponsors to pay back their loans.
A spokesperson for the banking association said Asobancaria is discussing the
issues with the finance ministry and other
government bodies but has not yet reached
an agreement.
Strength in numbers
Despite the concerns of the local financial
sector, the government says the participation of a wide range of funding sources is vital to the success of the 4G program, which
is expected to cost around 4% of GDP.
The program's three rounds involve
45 concessions and paving more than
8,000km of road. The costs are estimated
between $15 billion and $17 billion. "The
investment required is too much for Colombian banks," Andrade says.

http://www.LATINFINANCE.COM

Table of Contents for the Digital Edition of LatinFinance - July/August 2016