LatinFinance - September/October 2016 - 86

ever infrastructure security from Peru.
Gaining almost $2 billion in project
financing is no easy feat in Latin America
and project sponsors tapped into several
sources of liquidity in the private and public
sector.
Commercial lenders and development
banks from Europe supported the 20-year
loan, while global coordinators Citi, Morgan
Stanley and Santander inked commitments
from US, European and Peruvian
institutional investors for the 5.875% 2034
securitized bond.
Investors flocked to the bond trade after
a global marketing campaign. The notes,
issued by Lima Metro Line 2 Finance, are
backed by unconditional rights to receive a
series of payments, known as RPI-CAOs.

PROJECT: Lima Metro Line 2
LOCATION: Lima, Peru
FINANCING TYPE & SIZE: $1.15
billion bond, $800 million loan
BANKS: Bank of America Merrill
Lynch, Citi, Crédit Agricole,
Natixis, Société Générale,
SMBC, Cassa Depositi e Prestiti,
KfW IPEX-Bank, Santander,
BBVA, Intesa Sanpaolo, MUFG,
Deutsche Bank, Morgan Stanley
LAW FIRMS: Clifford Chance,
DLA Piper, Garrigues, Maples
and Calder

This was Peru's most-broadly distributed
RPI-CAO financing so far. The innovative
structure did not expose investors to
performance risk as the facility was
guaranteed by payments from A3/BBB+/
BBB+ rated Peru.
The various elements to the funding
package give the project sponsors liquidity
and flexibility while building the project -
and investors have a cushion of sovereign
payment obligations from investment grade
Peru.
Structured under a 35-year concession,
the Lima Metro project financing could
be the first of several similar transactions.
Under the bankable RPI-CAO model,
performance risk is mitigated for private
investors as the government would also
cover any revenue shortfalls from the train
line.
In addition to ACS/Iridium, Lima
Metro Line Two's project sponsors are

86 LATINFINANCE.COM - September/October 2016

Peruvian construction firm Cosapi, Vialia, a
subsidiary of Spanish constructor FCC and
Italian companies Salini Impregilo, Ansaldo
STS and Ansaldo Breda. The consortium has
a 35-year concession to build and operate
the $5.3 billion subway line. LF

BEST RENEWABLE ENERGY FINANCING

COLONIA ARIAS
The sponsor on the 70 MW Colonia Arias
wind farm project, Uruguay's Usinas y
Transmisiones Eléctricas (UTE), corralled
a mixture of debt and equity sources for
one of this year's more innovative hybrid
financings that is serving as a model for
future Uruguayan renewable projects.
While development banks and
multilaterals are a mainstay in Latin
America's renewables pipeline, the
Uruguayan utility opted to test the country's
equity market, alongside debt from
development agencies and a commercial
bank.
UTE floated a special purpose vehicle,
the Fideicomiso Financiero Arias, as part
of the capital raising for the project. UTE
injected approximately $10.7 million in
equity itself and coordinated and conducted
an initial public offering that raised $42.7
million on the Montevideo Stock Exchange
in December.
UTE signed a 20-year power purchase
agreement with a government-backed
offtaker, which gave investors comfort,
Gonzalo Casaravilla, UTE president says.
Pension funds and individual investors
bought the equity stake, with the order
book four times oversubscribed when the
shares went up for sale. With strong investor
appetite, the utility implemented a 70%
debt to 30% equity ratio.
UTE bought approximately $8.5 million,
or 20% of the IPO while investment funds
bought the remaining shares on offer.
The financing package introduced new
options for renewable energy funding
in Latin America, Casaravilla says, and
welcomed a diverse investor base in both
the equity and debt segments. The IPO is
likely to have a big impact on Uruguayan
renewables, he says. "We've introduced
new options for financing this sector and
included support from a wide range of
investors."
The hybrid financing also featured a $71.2
million A loan from the Inter-American
Investment Corporation and a $35.6 million
tranche from the China Co-Financing Fund

PROJECT: Colonia Arias
LOCATION: Uruguay
FINANCING TYPE & SIZE: $177
million facility including a $71.2
million A loan, $35.6 million
co-loan, $17.8 million loan and a
$42.7 million IPO
BANKS: BBVA, Inter-American
Development Bank and the
Inter-American Investment
Corporation, China Co-Financing
Fund for Latin America and the
Caribbean
LAW FIRMS: Clifford Chance,
Ferrere

for Latin America and the Caribbean.
Commercial bank BBVA rounded out the
debt portion with a $17.8 million B loan. The
$178 million project financing comes with a
20-year door-to-door maturity.
After the oversubscribed IPO, UTE
plans to mirror the debt and equity combo
structure in its next renewables financing -
the 70 MW Valentines project. The Colonia
Arias wind farm is set to generate some
303.1 GWh of power each year, diversifying
Uruguay's electricity mix and substituting
for fossil fuels. Spanish wind turbine
manufacturer Gamesa is installing 35 G114IIIA turbines that emit 2 MW each. LF

BEST POWER FINANCING

INTERCHILE
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.
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