LatinFinance - Special Edition - August 2013 - 27

are poised to keep advancing,
says taisa markus, a partner
at law firm Paul Hastings.
latam’s first wind energy
bonds – $298.7 million of notes
for acciona’s oaxaca ii and iV
units – were sold in 2012.
mexico has pushed
infrastructure for
some time, privatizing
telecommunications, ports,
airports and rail in the 1990s
to bring in commercial
investment. the spur
continues today. enrique
Peña nieto’s administration
unveiled in 2013 a push for
transport and communications
infrastructure, and has laid out
reforms to the energy sector.
“looking at the next 10
years, one of the biggest stories
could be the liberalization
of the mexican oil and gas
sector,” says isaac Deutsch,
managing director and cohead of specialized finance
at Sumitomo mitsui Banking
corporation.
investors’ high confidence
in mexico’s economy allows
for infrastructure funding
innovations. in may 2013,
mexican toll road Red de
carreteras de occidente sold
the first peso-denominated
project bond internationally,
raising 7.5 billion pesos ($603
million).
internationally placed local
currency infrastructure notes
have also emerged from Brazil,
where the 2014 World cup and
2016 olympics have pushed the
government to make an extra
drive to attract infrastructure
investment. again a toll road
operator was the first to make
a splash. concessionária auto
Raposo tavares (caRt) sold
the first large infrastructure
debenture overseas in
December 2102, a 750 million
real ($357 million) issue.
a tax change in mid-2013,
affording all Brazilian debt
issues the benefits once
exclusive to infrastructure
debentures, looked set to
make caRt a rare deal,

however. and BnDeS remains
a central source of funding,
although some question how
long it can keep up the pace
as amid continuing heavy
infrastructure needs.
that is not to say Brazil
has neglected infrastructure
financing. the privatization of
its electric and telecom firms in
the late 1990s was designed to
open the industries to private
capital and investment.
it passed public-private
partnership laws in 2006 –
where funding comes from
a mix of government and
private sector money – in
another turning point for
the country’s infrastructure
development. and in 2010,
then-president luiz inácio lula
da Silva launched a $526 billion
investment plan targeting
energy, transportation and
ports, among other sectors.
Creative solutions
Peru, as with other countries,
has struggled with social

unrest over the development
of some of its big infrastructure
projects, notably in the mining
sector. But public-private
partnerships in transportation,
energy, water and waste
sectors are of growing appeal to
investors.
in 2006 and 2007,
authorities devised a creative
solution to finance a large-scale
road concession projects,
using government-issued
certificates called certificados
de Reconocimiento del Pago
anual de obras (cRPao) to
take out bank debt. the fact
investors were taking on
sovereign risk made them
comfortable on financing the
highway development.
a capital markets reform
bill in the works and new
regulations to speed up
infrastructure projects
are among the measures
policymakers hope will keep
growth high.
as countries across latin
america search for the

best way to entice private
infrastructure investment,
colombia is scrutinizing a
broad range of possibilities.
investors are waiting to see
the details on the country’s
fourth generation (4G) road
concessions. the package, of
unprecedented size, covers
around 30 projects under a
public-private partnership
program of around $20 billion.
its history marked by
financial malaise and
terrorism, colombia has also
struggled with a complex
geography that hinders easy
transport, particularly by rail.
Under Juan manuel Santos,
the president, the country has
intensified a push to increase
competitiveness by improving
the transport networks. “What
this government did well is
they planned for the long
run,” says Juan Pablo acosta,
financing products manager
at Bancolombia. “the idea is
that the next government can
continue that plan.” LF

Infrastructure Deal of the Quarter century

Odebrecht Oil & Gas
Norbe VIII and IX Drillship bond, 2010
Project bonds have long been seen as a tool that could revolutionize infrastructure finance in latin america, opening funding possibilities on a scale not possible through
bank lending. and as oil production in Brazil’s pre-salt fields transforms the scale of
that industry, drillships will become a major component of the region’s infrastructure
build-out. as the first large issue from a latin borrower for a drilling rig, odebrecht
oil & Gas’s $1.5 billion deal sold in november 2010 wins infrastructure deal of the
quarter century for paving the way in the bond market for more such deals. others,
for floating service vessels, wind farms and toll roads, have followed in recent years,
piggybacking on the broadening of access for latam’s corporate issuers.
“the beauty of this bond was that we had already financed the construction of the
vessels through bank lending,” Roberto Ramos, chief executive of ooG, tells LatinFinance. “and the two drilling rigs were almost ready, allowing us then to place the
bonds and with the proceeds, to pay out the bank debt.”
the 10-year bond has an average life of eight years with a balloon at the end, which
means there is an opportunity to refinance the rigs as the end of the maturity approaches. the bond was priced at 6.375%.
“We also had a construction guarantee issued by Kexim, which then added a nice
rating to the construction risk,” says Ramos. the two deepwater drillships that were
financed – the Norbe VIII and Norbe IX – were built in Korea for Brazil’s Petrobras.
this year, ooG is building two pipe rig support vessels (PlSVs) in Korea, in a joint
venture with technip. the vessels again have a long-term contract with Petrobras.
“the construction phase is being financed by bank lending and export credit agencies, and once they’re ready – they’ll be ready mid-to-end of next year – then we’ll be
looking at refinancing that through a bond offering,” says Ramos. LF
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