LatinFinance - September/October 2016 - 88

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.

PROJECT: Interchile
LOCATION: Chile
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

"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

88 LATINFINANCE.COM - September/October 2016

BEST OIL & GAS FINANCING

WAHA PIPELINES
Odds were stacked against the three
project sponsors for the Waha natural gas
pipelines. The trio tackled regulations in
two countries while assembling a large
funding package - and at a time when
commercial banks' appetite for long-term
non-recourse finance was low.
To develop pipelines reaching Presidio
and San Elizario in Texas, and connecting
them with the Ojinage-El Encino pipeline
in Mexico, sponsors Carso Energy, Energy
Transfer Partners and MasTec needed
specific "presidential permitting", to cover
ground in the US and Mexico, Carso Energy
chief financial officer Hector Kuri says.
With two pipelines and two jurisdictions,
the sponsors in November found a way to
structure the 18-year $1.1 billion non-recourse
project financing in just about six months,
giving the Waha facility LatinFinance's Best
Oil & Gas Financing of the Year.
"For us, taking out any refinancing risk
from the structure was important, so from
day one we knew what our profitability
was going to be," Kuri says. "As sponsors,
we pushed for quick execution because
we worried that banks would not have the
liquidity."
Bank appetite for long-term loans at the
time was decreasing and if the financing
had been delayed it may not have reached
close at all, Kuri says. In the end, the
sponsors procured a $508 million tranche
for the 195-mile Waha-San Elizario pipeline
and a $647 million portion for the 148-mile
Waha-Presidio line.
With crude oil prices barely hovering
above $40 per barrel, Waha's billiondollar package stands out as the only
Mexican oil and gas loan of this size and
maturity in the last year, solely covered
by commercial banks. Kuri says the loans

PROJECT: Waha Pipelines
LOCATION: Mexico
FINANCING TYPE & SIZE: $1.1
billion non-recourse
BANKS: BBVA Bancomer, Mizuho,
MUFG, SMBC, CaixaBank, ING,
Intesa Sanpaolo, Banco Sabadell,
Korea Development Bank
LAW FIRMS: Milbank,
Shearman & Sterling

market is shifting to shorter tenors and minipermanent arrangements, making private
sector financings of this magnitude in oil and
gas difficult in the loans market.
"This is a long-term, non-recourse loan
and the universe of banks that can provide
this type of financing has reduced," he says.
"Banks that can participate in mini-perms is
wider."
The project sponsors mandated BBVA
Bancomer, Mitsubishi UFJ Financial Group,
Mizuho and Sumitomo Mitsui Banking
Corporation (SMBC) to underwrite the 18-year
loan. CaixaBank, ING and Intesa Sanpaolo
joined as mandated lead arrangers in
syndication.
Transporting natural gas from the Waha
region in Texas, the pipelines will provide
power in the central, northern and western
regions of Mexico, with state-backed utility
Comisión Federal de Electricidad as offtaker. LF

BEST LOCAL CURRENCY FINANCING

PACÍFICO 1
All the projects in Colombia's 4G toll road
concessions that have reached financial close
so far have raised as least part of the funding
in dollars. Autopistas del Nordeste, for one,
raised more than 60% of debt in dollars.
Two other projects, Pacífico 3 and Costera,
included long-term dollar bonds as part of the
financing structure.
Covipacífico, charged with financing the
Pacífico 1 toll road concession, the largest
project in the first round of the 4G program,
also got a portion in dollars but it raised the
majority of funding in local currency.
Local financial services firm
Corficolombiana, which owns the lead
developer Episol, arranged for Covipacífico to
get an 18-year loan for 2.15 trillion Colombian
pesos ($706 million) from five local lenders. In
comparison, Covipacífico got $150 million in
dollars.
"We talked with all the Colombian banks
and received letters of credit for something like
$1.5 billion," says Alejandro Sánchez, head of
investment banking at Corficolombiana. "In the
end, only Davivienda and Grupo Aval's banks
made the cut."
Davivienda and four banks that belong
to Grupo Aval - Banco do Bogotá, Banco
de Occidente, Banco Popular and Banco
AV Villas - priced the local-currency loan
at 7% over the IPC, Colombia's consumer
price index, stepping down to 6% over IPC
after construction. Grupo Aval also owns
Corficolombiana.
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