LatinFinance - November/December 2016 - 9

NEWS
LOANS

Bankers hope a new pipeline financing for Mexican borrower
Fermaca will reinvigorate the market, as infrastructure
developers appear to favor mini-perms. By Mick Bowen

A fresh push
The loans market, at least
in the energy sector, has been
slow this year. But Mexico's
Fermaca may change that.
The energy company recently
secured $622 million in
financing for the La LagunaAguascalientes natural gas
pipeline. Now it is arranging
another loan for almost $500
million for the Villa de ReyesAguascalientes-Guadalajara
pipeline. "This is a pretty big
transaction for 2016," says one
of the lenders. "It's been quiet
so far, but we're hoping this will
pick things up."
The nine banks on the deal,
with ING as the coordinating
lead arranger, put the spread
just below 200 basis points
over Libor at the start but
included step-ups that
eventually take the roughly
eight-year loan closer to
300 basis points over Libor.
Fermaca is not likely to hold
on to the loan for the duration.
Instead, it will probably issue
bonds once it has finished
construction within the next
two years. The other loan
involves the same group of
lenders and will likely include
a similar structure. "We want
to encourage a capital markets
takeout," the lender said.

Back to mini-perms

Earlier this year, infrastructure
developers appeared intent
on getting long-term financing
from the start and removing
any refinancing risk. Odinsa
got 1.27 trillion Colombian
pesos ($434 million) in long-

term financing for the Pacífico
2 toll road concession, while
OHL arranged 1.5 trillion
pesos in long-term loans
for the Autopistas al Río
Magdalena 2. Conconcreto
and a consortium led by CSS
Constructores were both
in the market for long-term
financing for two highway
public-private partnerships.
Other sponsors, such as
Colpatria, El Cóndor and
MHC, had previously chosen to
combine bank debt with bond
issues right off the bat.
Lately, however, the
developers in Colombia's 4G
toll road concessions program
appear to be returning to
more traditional financing
means, opting for mini-perms
or soft mini-perms that they
will later refinance in the
capital markets. Coviandina,
for example, wants to repay
a $700-million loan within
five or 10 years for the
Chirajara-Villavicencio toll
road. The concessionaire is
lining up four or five banks
and a local debt fund for the
peso-denominated financing.
Covioriente, another toll
road concessionaire owned by
Corficolombiana, is arranging
a one-year, $100-million
bridge loan before it seeks a
seven- or eight-year mini-perm
for slightly more than $800
million for the VillavicencioYopal toll road. Two other
concessionaires - Ruta del
Cacao, led by Cintra, and
Nuevo Cauca, led by CASS
Constructores - are also

Loans rank by volume, year to October 11
Citi retains lead
Rank
1
2
3
4
5
6
7
8
8
10

Bookrunner
Citi
Mizuho
MUFG
Credit Agricole CIB
BBVA
Itaú BBA
SMBC
SG CIB
Intesa Sanpaolo
JPMorgan
Total

Value ($m)
2,032
1,400
985
909
894
836
452
400
400
388

# Deals
11
7
5
4
9
10
6
1
1
2

21,590

96

Source: Dealogic

looking for toll road financing,
although the sizes and tenors
are still under negotiation.
Autopistas Urabá
could tip the balance. The
concessionaire will choose
between Goldman Sachs and
SMBC to lead approximately 2.2
billion pesos in financing for the
Autopista al Mar 2. If Autopistas
Urabá goes with Goldman
Sachs, the funding scheme
could involve both banks and
bonds. But if it goes with SMBC,
it will likely be an all-bank deal.

Brazilian doubts

The Brazilian loans market
remains in a state of flux. The
national development bank
BNDES has put an end to
bridge loans for infrastructure
concessions and PPPs, looking
to create the conditions for
commercial banks and bond
issues to fill in the gaps. It has

also blocked 4.7 billion reais
($1.47 billion) in loan payments
to five engineering companies
involved in the Lava Jato
corruption scandal, including
the two largest construction
companies in the country,
Odebrecht and Andrade
Gutierrez. BNDES has cut
funding levels for highway
concessions to as much as 50%
of investments, down from
70% during the administration
of former President Dilma
Rousseff, but it has increased
proposed financing for solar
projects to 80% from 70%.
BNDES' new funding schemes
have yet to be tested, but the
government's Investment
Partnerships Program, or PPI,
has stocked the infrastructure
concessions pipeline with 25
projects, with the next round
of auctions scheduled to take
place before year-end. LF

November/December 2016 - L ATINFINA NCE.COM 9


http://www.LATINFINANCE.COM

Table of Contents for the Digital Edition of LatinFinance - November/December 2016

Contents
LatinFinance - November/December 2016 - Cover1
LatinFinance - November/December 2016 - Cover2
LatinFinance - November/December 2016 - Contents
LatinFinance - November/December 2016 - 2
LatinFinance - November/December 2016 - 3
LatinFinance - November/December 2016 - 4
LatinFinance - November/December 2016 - 5
LatinFinance - November/December 2016 - 6
LatinFinance - November/December 2016 - 7
LatinFinance - November/December 2016 - 8
LatinFinance - November/December 2016 - 9
LatinFinance - November/December 2016 - 10
LatinFinance - November/December 2016 - 11
LatinFinance - November/December 2016 - 12
LatinFinance - November/December 2016 - 13
LatinFinance - November/December 2016 - 14
LatinFinance - November/December 2016 - 15
LatinFinance - November/December 2016 - 16
LatinFinance - November/December 2016 - 17
LatinFinance - November/December 2016 - 18
LatinFinance - November/December 2016 - 19
LatinFinance - November/December 2016 - 20
LatinFinance - November/December 2016 - 21
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LatinFinance - November/December 2016 - 23
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LatinFinance - November/December 2016 - 25
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LatinFinance - November/December 2016 - Cover3
LatinFinance - November/December 2016 - Cover4
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