awards
LatinFinance's annual recognition of the year's standout transactions in project finance and infrastructure
Each year, LatinFinance’s editorial team examines information provided by market participants and publicly available data to choose the winners of our Project & Infrastructure Finance Awards. This year’s winners are:
EDP Transmissão Aliança
Salvador Bahia Airport
ItapoaÌ
Autopista al Mar 1
Enel Green Power
BRK Ambiental
GaÌs Natural Açu
Fruta del Norte
TAG Pipeline
Internet Para Todos
PetroperuÌ
Paraguay’s Bioceanico Highway
DP World Caucedo Port Terminal
Fontus Hydro
EnergiÌa del Valle de MeÌxico II
Philippi Prietcarrizosa Ferrero Du & UriÌa
Mattos Filho
Ritch Mueller
Clifford Chance
Santander
ItauÌ BBA
Natixis
SMBC
SPONSOR: EDP Brasil
LOCATION: Santa Catarina, Brazil
FINANCING TYPE & SIZE: $312 million project financing
BANK: ItauÌ BBA
LAWFIRMS: CesconBarrieu,VBSO
Brazil's debenture market has become an increasingly attractive financing alternative for local companies seeking reais-denominated debt. That trend was certainly confirmed last year when EDP Brasil sold BRL1.2 billion ($312 million) in local deben- tures to fund the construction of new transmission lines, part of a plan for the Brazilian unit to double in size by 2020.
EDP Aliança won a concession in April 2017 to build and operate 485km of transmission lines in the state of Santa Catarina.
The most recent issuance was the single largest infrastructure debenture to finance a project in the Brazilian market so far. Fitch gave the debentures an AA(bra) rating on the local scale, citing guarantees from Celesc, which owns 10% of the project, and EDP Brasil, in which Portugal’s EDP holds a 51% share.
ItauÌ BBA coordinated the sale and priced the 10-year notes at 6.72% over the IPCA consumer price index, putting the cost of capital 3.34% over IPCA after taxes, the energy company said in a statement. The issuance was leveraged at 100% of the project.
EDP finance director Eduardo Masson indicates that the company wanted to match the debt currency to its revenue, and had explored other financing oper- ations.
He points out that the pricing happened just before presidential elections when interest rates began to spike. In the end, he says, the pricing wasn’t as good as the company may have wanted but better than what it might have ended up with.
Masson says EDP initially invited two banks to lead the issuance, but that only complicated discussions. “There were a lot of problems,†according to Masson. At the end of the day, EDP chose to work only with ItauÌ, figuring that dealing with a single bank would simplify the deal negotiations, given the size of the financing.
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SPONSOR: Vinci Airports SAS
LOCATION: Salvador, Bahia, Brazil
FINANCING TYPE & SIZE: $138 million project financing
BANKS: Banco do Nordeste, Banco Bradesco, Itaú Unibanco, Banco ABC Brasil, Banco ABN Amro, BNP Paribas, Intesa Sanpaolo Brasil, Banco Múltiplo, SMBC
LAW FIRMS: Mattos Filho, Vieira Rezende Advogados
Due to its successful execution, its true non- recourse status and important social impact, Vinci Airports’ Salvador Bahia airport expansion and ren- ovation picks up LatinFinance’s prize for Airport Financing of the Year.
To fund the airport’s upgrade, Vinci secured a 20-year BRL517 million true non-recourse loan from Banco do Nordeste do Brasil (BNB), backed by a guar- antee from seven banks, a record for airport financ- ings in Brazil, according to Mattos Filho, Veiga Filho, Marrey Jr. e Quiroga Advogados, which provided counsel to the borrower. The deal was BNB’s first ever financing for an airport.
The syndication process for the loan’s surety letters was rapidly executed, thanks to its use of advanced versions of financing documents to pick the banks. The approach enabled an optimized and efficient execution of the deal, according to the law firm.
Salvador Bahia’s financing came amid the structur- ing of a true non-recourse loan, where the company’s equity obligations are limited only to base-equity contributions. The French-based Vinci is not liable for any delays or cost overruns, atypical for a Brazil- ian market where surety providers don’t typically assume such risk.
It was the first non-recourse structure imple- mented in a Brazilian airport financing. BNP Paribas was the financial advisor to Vinci.
Awarded a 30-year concession by Brazil’s National Civil Aviation Agency in 2017, Vinci began operating the airport in January 2018.
The airport was the busiest in northeast Brazil last year, with 9 million passengers passing through. The upgrade includes the construction of a new 20,000 square meter departure area and refurbishment of the existing terminal, construction of a new pier with six boarding bridges, modernization of the HVAC and wastewater systems, and refurbishing of runways. Investments in sustainability include the construc- tion of a solar plant meant to supply energy equiva- lent to that needed by 58,000 households.
PROJECT: Itapoá
SPONSOR: Portinvest Participações S.A. and Aliança Administração de Imóveis e Participações Ltda. (Hamburg Süd group)
LOCATION: Itapoá, Brazil
FINANCING TYPE & SIZE: $116 million project financing
BANKS: IDB Invest, Banco ABC Brasil, ING
ADVISOR: BR Partners
LAW FIRMS: Mattos Filho, Tozzini Freire, Allen & Overy, Norton Rose Fulbright
The need to expand Port Itapoá in the southern Brazilian state of Santa Catarina was clearly obvious in 2015, when it reached maximum capacity for the second year in row. But it couldn’t have been a worse time to look for financing as Brazil sank into a crippling recession.
“There wasn’t a lot of money in the market and it was very expensive, with short tenors,†recalls Thiago Gama, the port’s administration and finance manager. “It was the eye of the hurricane. The worst time to get funding. It was very challenging.â€
Still, the container port issued a BRL90 million debenture in 2016 to begin the much-needed expansion, extending the quay and upgrading the yard.
Then in 2017, as Brazil’s economic climate improved and financing options looked more favorable, Itapoá decided to return to the market. The port hired BR Partners to advise management and began a series of meetings with commercial banks and multilateral agencies.
By the end of the year, the Inter-American Development Bank, acting through IDB Invest, and ING agreed to provide two-thirds of the port’s financing needs. Banco ABC Brasil supplied the remaining third.
The lenders came to the deal with different perspectives, ranging from social to commercial. “They had different DNA. We had a lot of talk about the vision,†Gama says.
In the end, each contributed BRL150 million ($36.5 million) to the BRL450 million package, a sum that allowed Itapoá to repay the previous debt and begin an expansion program. The port also had to negotiate an intercreditor agreement that had to meet the requirements of both Brazilian capital markets instruments and multilateral development banks.
Itapoá is now doubling the capacity of its yard to 200,00 square meters and extending its quay by 170 meters. As the container handling capacity grows from 500,000 TEUs to 2 million TEUs, the port will have the ability to handle two large cargo ships simultaneously, says Gama.
“We invested in a better future,†says Gama. “We have grown very quickly, and we’re a healthy company.â€
SPONSOR: Devimar (Sacyr, Strabag and Concay)
LOCATION: Antioquia, Colombia
FINANCING TYPE & SIZE: $717 million project financing
BANKS: SMBC, KfW IPEX-Bank, Société Générale, IDB Invest, FDN, ICO, CAF, BlackRock
LAW FIRMS: Paul Hastings, Brigard & Urrutia, Clifford Chance, Godoy y Hoyos, PPU
As Colombia’s Devimar arranged financing for the Autopista al Mar 1 earlier this year, it encountered several obstacles, including the reluctance of local commercial banks to take part in another toll road concession.
“We had some delays with the financing due to market conditions and couldn’t count on the participation of some local banks as a result,†says Devimar CEO Jesús RodrÃguez.
Engineering challenges compounded the financing hurdles as Devimar undertook to build a road in a mountainous region, sometimes at altitudes of 1,800 meters, RodrÃguez said.
But Devimar managed to put the funding in place nine months after it opened the syndication process, a relatively short amount of time for a project in the fourth generation (4G) of toll road concessions.
Led by SMBC as financial advisor, Devimar found eight lenders willing to take part in a 16.5-year loan for 2.23 trillion Colombian pesos ($664 million), including development banks and commercial lenders.
The local development bank Financiera de Desarrollo Nacional (FDN) directly provided 553 billion pesos and supplied peso-denominated credit lines for the Inter-American Development Bank (IDB), IDB Invest, Instituto de Crédito Oficial (ICO) and BlackRock to add nearly another 1 billion pesos in financing.
In addition, German development bank KfW joined SMBC and Société Générale on a $225 million tranche in US dollars.
“We achieved financing through the introduction of various mechanisms that give security to lenders, which entailed more than 60 reserve accounts, each one supporting a particular risk, such as cost overruns, equity funding issues, social protests and due diligence setbacks,†RodrÃguez said.
With construction almost halfway completed, Devimar expects to invest roughly $500 million in total to build the road and around another $1 billion to operate it over the course of the 25-year concession contract, RodrÃguez said.
SPONSOR: Enel Américas
LOCATION: Coahuila and Guanajuato, Mexico
FINANCING TYPE & SIZE: $606 million project financing
BANKS: BBVA, Bancomext, EIB, IDB Invest, CaixaBank, Natixis, MUFG
LAW FIRMS: Shearman & Sterling, Ritch Mueller, Norton Rose, STB, Clifford Chance
Italy’s Enel, long a pioneer in renewable energy projects, displayed its green expertise this past year when it sponsored three solar projects in Mexico with a total capacity of 1,088 MW.
Of the three sites, Villanueva I in the state of Coahuila is the largest solar project in the Americas. The other two projects are Villanueva III and Don José in the state of Guanajuato. The projects were awarded to Enel Américas in Mexico’s first long-term auction in March 2016. At the same time, all three solar projects received a 15-year power purchase agreement and 20-year clean energy certificates, or CELs.
Enel Green Power initially secured an 18-year, $605 million financing package for the three solar projects in October, with BBVA, Caixa, MUFG and Natixis serving as bookrunners. IDB Invest, the European Investment Bank and Bancomext also participated.
The company, which had invested $950 million in the solar farms, had previously agreed to sell 80% of the projects to Canadian institutional investor Caisse de dépôt et placement du Québec (CDPQ) and Mexican pension fund CKD Infrastructure México (CKD IM) for $1.4bn. Enel Green Power, which held the remaining 20%, continued to build and operate the assets.
Enel Green Power, the winner of LatinFinance’s Project Sponsor of the Year award, completed the projects last year, connecting them to the power grid.
The Villanueva projects contain more than 2.5 million solar panels and can reduce carbon emissions by more than a million tons of CO2, according to Enel. Don José , with 810,000 panels, reduces emissions of 340,000 tons.
Enel Green Power entered the Mexican renewable energy market in 2008 and now has a managed capacity of 2 GW.
SPONSOR: BRK AmbientalLOCATION: Recife, BrazilFINANCING TYPE & SIZE: $310 million project financingBANKS: IDB Invest, Caixa, Banco do NordesteLAW FIRMS: Mattos Filho, Hogan Lovells, Norton Rose Fulbright, Machado Meyer
In 2013, wastewater treatment was available to only 5% of the 4 million inhabitants in the state of Pernambuco in northeast Brazil, one of the country’s poorest regions. Six years later, thanks to the largest public-private partnership in Brazil, coverage has climbed to 40%, with a goal of 90% by 2037, according to Sérgio de Barros, chief financial officer of BRK Ambiental.
The company, the largest private sanitation company in Brazil, is in the midst of a BRL1.7 billion expansion, financed by IDB Invest, Caixa and Banco do Nordeste (BNB).
The project will expand and improve the wastewater infrastructure in 15 municipalities in the metropolitan region and Recife, which includes a new network with 107 kilometers of wastewater collection, pumping stations, and water treatment stations. The second phase includes additional treatment stations and 79,000 wastewater systems in homes.
“From a financing perspective, the challenge was to deal with these three different financial institutions with different perspectives and different aims,†says Barros. “Everyone had to be on the same page and understand the importance of the project.â€
Luckily, Barros says, the loan participants “understood the project not only from a financing perspective but also a social impact perspective.â€
The participation of development banks was crucial, given market conditions and the size of the project, according to Barros.
“Even though we’re getting better, we don’t have a very developed capital market in Brazil that would allow us to reach high tenors and huge issuance,†he says.
Still, there were challenges. State-owned Caixa provided BRL650 million for the first cycle of the project, but must limit its leverage to 70% of capital expenditures when using public funds. IDB stepped up to promise a total of BRL442 million in two tranches, with a 20-year term with a five-year grace period. BNB provides BRL578 million, also with a 20-year tenor and 4-year grace period.
SPONSOR: BRK Ambiental
LOCATION: Recife, Brazil
FINANCING TYPE & SIZE: $310 million project financing
BANKS: IDB Invest, Caixa, Banco do Nordeste
LAW FIRMS: Mattos Filho, Hogan Lovells, Norton Rose Fulbright, Machado Meyer
Gás Natural Açu (GNA) is one of the most ambitious power projects ever undertaken in Latin America. A fully integrated liquefied natural gas (LNG) to power project, it includes three massive projects: an LNG port, a power plant and transmission lines. It’s one of the largest infrastructure projects in Latin America that will generate the 1.34 GW in Porto de Açu in the state of Rio de Janeiro.
A joint venture formed by Prumo LogÃstica, BP and Siemens, GNA will be able to deliver power to a city of 4 million when it begins operations in 2021. Siemens also signed a long-term service agreement to operate and maintain the plant.
“It’s a multinational project,†says Bernardo Perseke, CEO of GNA.
Instead of seeking dollar financing, it was decided to fund the project with reais to de-risk the currency uncertainty. Project financing totaled BRL4.5 billion ($1.2 billion) and was structured by KfW- IPEX, the German export credit agency and Brazil’s BNDES development bank. The IFC provided a 15-year loan in local currency to fund construction of the LNG plant.
The project already has 36 PPAs and will go a long way in diversifying Brazil’s energy sources, which depends on hydroelectric power for 70% of its needs. Long droughts in recent years have underscored the need for a better energy mix. The IFC says GNA will also reduce Brazil’s carbon footprint by an estimated 139,000 tons of CO2 equivalent emissions annually.
The project is part of a broader LNG park. The company will also build the GNA II UTE with 1.7 GW of installed capacity. Together, the two plants will have a 3 GW capacity.
SPONSOR: Lundin Gold
LOCATION: Zamora-Chinchipe, Ecuador
FINANCING TYPE & SIZE: $350 million project financing
BANKS: ING Capital, KfW IPEX-Bank, Société Générale, CAT Financial, Scotiabank, Natixis, KfW IPEX, Bank of Montreal
LAW FIRMS: Norton Rose Fulbright, Lexim Abogados, Milbank
Ludin Gold’s effort to secure a $350 million syndicated loan in 2018 for the Fruta del Norte gold mine in Ecuador actually began years earlier after the Canadian company purchased the mine from Kinross Gold in 2014 for $240 million.
The first step was to secure sufficient equity for the mining project, according to Ron Hochstein, Ludin’s CEO. To that end, Ludin began working with Orion and Blackstone in 2015. Both private equity groups had done similar deals in Canada. But this was their first venture in Ecuador for large-scale mining.
Hochstein recalls that the firms did exhaustive due diligence, spending much of their time focusing on the challenges of investing in mining in Ecuador. Kinross had halted the mining project years earlier after failing to reach an agreement on the terms to develop the mine.
“A lot of people were still concerned about Ecuador. Everyone was pretty comfortable with the project,†he says.
Ludin had already secured an agreement with Ecuador before seeking financing. “It took us several months of pretty intense negotiations. But we were able to get there, says Hochstein. “Ecuador, having gone through the Kinrod experience, realized you can’t have an agreement that’s one-sided.â€
Before long, the private equity firms signed off on the commercial potential of the project, clearing the way for Ludin to seek financing. “It was like the Good Housekeeping seal of approval,’ says Hochstein.
Ludin eventually secured $400 million in equity, allowing it to seek additional financing from banks.
In 2018, Ludin secured a syndicated loan from ING Capital LLC, Société Générale, Caterpillar Financial Services Limited (CAT Financial), the Bank of Nova Scotia, Natixis, Kowa IPEX-Bank GmbH and the Bank of Montreal.
The participation of KfW is unusual. Ludin had turned to the state-owned German development bank as part of a trade financing package. But unlike copper concentrate, gold concentrate isn’t considered a strategic import by Germany. Still, Hochstein says the lender “liked the project so much they came in as a pure debt holder.â€
As for the future, Hochstein says Fruta del Norte is on “target for its first production in Q4 of this year.â€
SPONSOR: Engie/CDPQ
LOCATION: Brazil
FINANCING TYPE & SIZE: $8.6 billion acquisition
BANKS: Itaú BBA, Banco do Brasil, Bradesco, Mizuho, MUFG, BNP Paribas, Crédit Agricole, ING Capital, Société Générale, SMBC, BNP Brasil
LAW FIRMS: Stocche Forbes, Machado Meyer, Jones Day, Lobo de Rizzo, Stikeman, McCarthy, White & Case, Mattos Filho, Holland & Knight, Tauil & Chequer
When Petrobras put its 90% stake in a natural gas pipeline unit up for sale, it marked the state-run energy giant’s biggest-ever single asset sale.
A consortium led by Francé’s Engie and Canadian pension fund Caisse de dépôt et placement du Quebec (CDPQ) beat out several other prospective buyers after multiple rounds of bidding, offering $8.6 billion for the unit, Transportadora de Gas SA, or TAG.
“Engie is very involved in natural gas in other parts of the world, particularly Europe, but we had nothing in Brazil,†says Raphael Barreau, Engie’s head of acquisitions, investments and advisory in Brazil. “So this was an opportunity for us, and it was very important.â€
The deal paved the way for Engie, which operates France’s gas network, to develop TAG, the largest natural gas transmission owner in Brazil. TAG operates a 2,800 mile pipeline network spanning 10 states in northern Brazil.
To help fund the acquisition, Aliança Transportadora de Gás Participações, a division of the Engie, issued BRL14 billion in debentures, while Engie and CDPG also arranged $5.95 billion in financing from 10 lenders, including BRL13.5 billion and $2.45 billion.
The international and local debt facilities rank as one of the largest acquisition financings in Brazil and among the largest successfully closed hybrid acquisition and project financings in Latin America.
Bradesco BBI was the lead coordinator on Aliança’s debenture deal, pricing the seven-year notes at 180bp over the DI interbank lending rate. Citi advised Engie and CDPQ on the deal while Santander advised Petrobras on the sale.
SPONSOR: Telefonica, Facebook, IDB Invest, CAF
LOCATION: Peru
FINANCING TYPE & SIZE: JV
LAW FIRMS: Estudio Echecopar, Hogan Lovells, Rebaza, Alcázar & De las Casas, Clifford Chance, Garrigues, DLA Piper Peru
Due to its innovative concept and business model, which will enable a far-reaching impact in Peru’s underserved communities, the Internet para Todos program has been awarded LatinFinance’s Social Infrastructure of the Year award.
Telefónica del Peru and Facebook have teamed with development banks IDB Invest and CAF to provide internet access to rural populations in Peru.
The composition of the Internet para Todos joint venture is unique in that it constitutes the first time a telecom player like Telefónica has paired with a company from the digital industry such as Facebook, according to Aitor Ezcurra, IDB Invest corporate division chief.
“Facebook brings the technical expertise of managing data and the commitment to increase connectivity in the region. Telefónica brings the knowledge of the telecom industry in Peru. The development banks bring a long-term view and a deep connection to the public sector,†Ezcurra says.
Internet para Todos will rely on existing infrastructure owned by Telefónica and invest in upgrading existing voice services and building new towers, fiber optic cables and antennas to deliver fast mobile internet coverage in a wholesale Network as a Service (NaaS) model, Ezcurra says. Additional infrastructure will take roughly a year and a half to complete.
He says the joint venture plans to avoid any leverage and fund all capital expenditures through equity contributions.
Telefónica subsidiary Movistar is the first Mobile Network Operator to have signed on, but the JV expects several client agreements in the coming months.
Currently, 8 million people don’t have access to internet in the Andean country. The main regions that Internet para Todos plans to serve include Cusco, Huanuco, Junin, Amazonas, Ancash, Arequipa, Lambayeque, Loreto, among others, according to Ezcurra.
The concept behind the “Internet for All†could easily be replicated in other parts of Latin America, especially in Argentina, Bolivia, Brazil and Colombia, Ezcurra adds. Currently, 100 million people don’t have adequate access to mobile broadband in the region.
SPONSOR: Petroperú
FINANCING TYPE & SIZE: $1.3bn loan
BANKS: BNP Paribas, JP Morgan, HSBC, Citibank, Santander, Deutsche Bank
LAW FIRMS: Allen & Overy, Estudio Echecopar, Skadden, Arps, Slate, Meagher & Flom, Muñiz, Baker MacKenzie
Slightly more than a year after a $2 billion bond sale, Petroperú signed a 10-year loan for $1.3 billion to finance renovations to the Talara oil refinery in northwest Peru.
The loan came backed by a 99% guarantee from the Spanish export credit insurance company CESCE and involved 13 international lenders. It was both the largest deal that CESCE had worked on and the largest loan supported by an export credit agency (ECA) in Peru.
“After the bond issuance, we wanted to diversify our sources of funding, take advantage of the fact that we are a government-owned company, the pricing discovery from the bonds and project advancements to maybe obtain a loan,†says Petroperú CFO Mathius Sersen. “We had discussions with insurance companies, investors, and then decided to go with a guaranteed corporate loan structure.â€
Petroperú opened talks with seven banks – BBVA, BNP Paribas, Citi, Deutsche Bank, HSBC, JPMorgan and Santander – and wanted to close the loan by April last year. By September, as the negotiations carried on, six more lenders had joined the deal. The state-owned oil company eventually signed the loan in late November.
Having the Spanish engineering companies Grupo Cobra and Técnicas Reunidas involved helped secure CESCE’s participation, according to Sersen.
The loan pays an interest rate of 3.96%, including the cost of the guarantee, or 3.285% without the guarantee. The first payment is not due until six months after the refinery reopens.
And now Petroperú is looking to replicate the loan on a smaller scale, Sersen says.
To raise the remaining $800 million to complete the $5 billion project, Petroperú is seeking a 12-year, $200 million loan, backed by CESCE. It is also considering a $600 million bond sale in early 2020, he says.
The project is 80% complete and is scheduled to start commercial operations in mid-2021, Sersen says.
SPONSOR: Consorcio Corredor Vial Bioceánico
LOCATION: Paraguay
FINANCING TYPE & SIZE: $732 million project bond
BANKS: UBS LAW FIRMS: Clifford Chance, Mayer Brown, BKM Berkemeyer
In May, Consorcio Corredor Vial Bioceánico, a toll road concessionaire in Paraguay owned by Brazil’s Queiroz Galvão and the local builder Ocho A, sold 15-year $732m Euroclearable bonds.
“The success of this transaction is the result of extraordinary collaboration between the Government of Paraguay, Ocho A, Queiroz Galvao and UBSâ€, according to Juan Carlos Betancur, Executive Director of Structured DCM Americas at UBS, which led the deal as sole bookrunner.
The transaction is the first international bond to finance an infrastructure asset in the country under Law 5074, passed in 2013, to facilitate the use of capital market to fund infrastructure projects.
Under the pass-through structure, the notional and interest payments received by the issuer under the Certificado de Reconocimiento de Pago (CROP) are treated only as principal when paid to the bond holders.
This equates to a pricing of 120bps over the sovereign curve, Betancur says, creating a benchmark for the financing cost of future infrastructure projects in the country.
UBS started working with sponsors Ocho A and Queiroz Galvao in 2016, proposing different potential financial structures when the project was still up for bid.
The consortium’s offer was the lowest, both in terms of construction and financing costs, Betancur says.
The section 2 of the Bioceanico road will help connect Brazil’s Atlantic Coast to Chile’s Pacific Coast. It is expected to be put up for bid next year, likely taking advantage of Law 5074, and tap into a project bond once again, Betancur says.
SPONSOR: DP World Caucedo
LOCATION: Boca Chica, Dominican Republic
FINANCING TYPE & SIZE: $285 million senior secured credit facility
LENDERS: Citibank, Scotiabank
LAW FIRMS: Cleary Gottlieb, White & Case, Bobadilla
When DP World began operating the Caucedo Port Terminal in 2003, the Dubai-based company always anticipated a sizeable expansion for the Dominican Republic facility. After all, the master plan for the port, which is in a free trade zone, reflected the country’s ambition to become a strategic shipping hub for markets in the Caribbean, as well as Central and South America.
DP World took a major step towards that goal at the end of 2018 when it obtained a $285 million senior secured credit facility to restructure $150 million in existing debt, while embarking on a significant expansion.
“We always had the vision to expand our capacity,†says Eduardo Guerra, director of finance for the port.
Citibank and Scotiabank were the lead lenders for the 7-year credit, with a floating rate above Libor. Panama’s Banco Popular and Multibank also contributed $50 million in a wider syndication. Cleary Gottlieb advised the company.
The expansion, scheduled for completion in the first quarter of 2020, expands the port’s berth by 400 meters. Equipment purchases totaling $80 million, including additional cranes and other equipment to move shipping containers, will allow Caucedo to handle more than 2 million containers a year, compared with the current 1.4 million.
The Dominican Republic has a strong economy that promotes imports and exports. Its central location also makes it attractive for regional shipping, according to Guerra.
“Our strategy is to create a logistics hub within the Dominican Republic. Not only does it have the largest market in Central America and the Caribbean, but it has an attractive position in the center of the Caribbean basin for vessels going westbound and eastbound as well as north and south,†he says. “For us, it provides strategic advantages.â€
SPONSOR: Glenfarne/EnfraGen LLC
LOCATION: Panama
FINANCING TYPE & SIZE: $100 million loan
BANKS: DNB, Société Générale
LAW FIRMS: Paul Hastings, Milbank, SIGMA, Hogan Lovells, ARIFA, Garrigues
Shortly after acquiring three hydroelectric power plants in Panama, carrying 30MW of installed capacity, Glenfarne’s Fontus Hydro quickly devised a refinancing strategy for the project.
“We went to a handful of relationship banks, educating them on the asset, the high quality nature and predictability of the market in Panama,†according to Brendan Duval, Managing Partner at Glenfarne Group.
The New York-based owner and operator of energy and infrastructure assets chose DNB and Société Générale, according to Duval.
The loan enabled Glenfarne to refinance local bonds tied to the projects and held by Banco General.
Glenfarne took advantage of the project’s strong fundamentals to opportunistically secure new capital for the project.
“These assets have a very long useful life – could be operational 100 years from now -- and the assets have a high quality operating history, supply to an interesting mix of merchant and contracted power clients and are located in an investment grade country that is a close ally to the US with very modern laws and regulations,†Duval says.
These Fontus Hydro assets are supported by contracted cash flows through 2029 via government-regulated power purchase agreements with Empresa de Distribución Eléctrica Metro – Oeste SA (EDEMET), Empresa de Distribución Eléctrica Chiriquà (EDECHI) and Elektra Noreste SA (ENSA).
The Panamanian market is attractive to power generators looking to sell in the spot market, as “it has a very clear and transparent mechanic which we like a lot, with good pricing signals and open access to all,†Duval says.
SPONSOR: EVM/GE (EFS Global Energy)
LOCATION: Axapusco, Mexico
FINANCING TYPE & SIZE: $750 million project financing
BANKS: BNP Paribas, Citi, SMBC
LAW FIRMS: Shearman & Sterling, Paul Hastings, Creel, Ritch Mueller, Galicia Abogados
In 2017, GE and EnergÃa del Valle de México reached an agreement to team up to develop energy generation projects in Mexico.
Late last year, a consortium led by the two companies finalized long-term financing for a greenfield natural gas-fired power plant, EnergÃa del Valle de México II. The 850 MW combined-cycle plant is located in the Axapusco municipality in Mexico. The project is part of a broader modernization plan being carried out by Comisión Federal de Electricidad, Mexico’s state utility, to meet Mexico’s growing energy needs in the critical Mexico City and Guadalajara regions.
The financing included an impressive array of components — a $469 million project bond, a $125 million term loan and some $146 million in letters of credit. The hybrid financing also included a private placement with institutional investors to guarantee longer tenors, an approach gaining in popularity in Mexico. The sponsors tapped bank and private placements at the same time.
The bookrunners included Citi, SMBC, BNP Paribas and Bancomext. Milbank represented the four commercial banks, while Sherman & Sterling represented EVM II and Paul Hastings counseled EVM as the sponsor the deal.
LATAM OFFICES: Lima, Santiago, Bogota
HEAD PARTNERS: Marcelo Armas and Martin Acero (Co-chairs), Guillermo Ferrero (Managing Partner, Peru)
In recent years, the Andean region has been home to one of the busiest infrastructure and project financing markets in Latin America.
But fallout from the Odebrecht scandal has had a chilling effect on markets in Colombia and Peru.
Still, PPU has skillfully led clients through the headwinds, making it the winner of the award for Best Infrastructure Law Firm: Andes.
“It certainly has been a challenging year,†says Juan Fernando Gaviria, a partner in PPU’s Bogota office.
The firm showed good range working across Colombia, Peru and Chile. It was involved in the financial closing of the Ruta del Cacao 4G highway project included a COP1.68 trillion debt package to help fund the construction of the Bucaramanga-Barrancabermeja-Yondó road.
It was also involved in the Autopista al Mar 1 project, serving as a counsel to BlackRock, which was among the international lenders in the project. In Peru, PPU worked on the Lima Metro’s Line One project bond issuance. And in Chile, PPU worked on the $2.5 billion financing of the development of the Quebrada Blanca 2 copper mining project.
Looking ahead, Gaviria expects activity to increase in the transportation sector in Colombia. Among the country’s biggest projects is a plan to build the first line of Bogota’s long-planned subway system. “I think transportation deals are going to pick up very quickly over the next few months,†he says.
Gaviria also says he expects Peru’s infrastructure sector to rebound in 2020 from its recent slump.
LATAM OFFICES: São Paulo, Rio de Janeiro and Brasilia
HEAD PARTNERS: Bernardo Mocho, Fabiano Brito, Felipe Feres, Giovani Loss, Marina Anselmo Schneider, Nilton Mattos, Pablo Sorj, Thiago Fernandes Moreira, Thiago LuÃs Sombra
Mattos Filho demonstrated its versatility by participating in some of Brazil’s most ambitious infrastructure deals over past year, including Salvador de Bahia Airport, Gás Natural Açu (GNA) and BRK Ambiental’s wastewater project.
The firm represented the French airport operator Vinci Airports in the BRL517million ($138 million) Salvador de Bahia deal. It was the first time Banco do Nordeste provided airport financing. It was also supported by a syndicate of seven commercial banks.
Partner Pablo Sorj calls the airport deal especially challenging. For starters, Salvador Bahia was Vinci Airports first concession in Brazil. “It’s very unique to have a nonrecourse financing in Brazil with a first-time sponsor,†he says.
What’s more, it was a truly non-recourse financing. “The banks only relied on the project,†says Sorj. “There was no additional sponsorship support for construction cost overruns.â€
The BRL4.5 billion GNA project was similarly challenging. “Every LNG power project is complex,†says Sorj. “This is only the second one in Brazil.â€
Mattos Filho assisted power generation company UTE GNA I Geração de Energia throughout the negotiations of the financing with the senior lenders, which included export credit agencies the IFC, BNDES and Germany’s KfW-IPEX. Sorj noted it was unusual because KfW took on the construction risk because of the participation of Siemens which provided equipment to the project. “Quite a unique profile with the role of this ECA,†he says.
The BRL1.7 billion BRK Ambiental wastewater infrastructure project was another massive undertaking, the largest sanitation project in Latin America. Beyond its size, the duration also made BRK exceptional, according to partner Bernardo Mocho.
BNB, Caixa and IDB Invest are financing different cycles of the project, which will eventually serve 90% of the 4 million inhabitants in the metropolitan region of Recife in northeastern Brazil. “It’s a continuing capex project so not all the capital is used at first,†says Mocha. “Some of the investment may not be made for five or six years.â€
Adding to the complexity: the deal closed after the second round of Brazil’s presidential elections and Caixa’s management changed. “Closing in the midst of a changing administration was a bit challenging,†recalls Mocho.
As for the future, Sorj believes the government’s privatization program will stir more deal activity. “You could see new faces and players in the market,†he says. Mocho adds that the changing priorities of BNDES and other development banks will make room for more alternative local financing.
LATAM OFFICES: Mexico City
HEAD PARTNER: Pablo Perezalonso
Though the presidential elections loomed large in Mexico last year, Ritch Mueller found itself at the center of some of the biggest infrastructure deals in Latin America.
One of the biggest was a $600 million loan for Enel Green Power’s Villanueva I, Villanueva III and Don José solar projects. Together, they have a capacity of almost 1GW.
“It’s really a landmark transaction,†says partner Thomas Mueller, whose law firm represented the lenders, BBVA Bancomer, Caixabank, Natixis, MUFG, Bancomext , IDB Invest and the European Investment Bank. “Mexico has tremendous solar resources.â€
One of the more complex deals involving the firm was the EVM II financing, which brought together a dozen institutional investors and a syndicate of commercial banks, including Citi, BNP, SMBC and Bancomext.
Ritch, Mueller represented EVM Energia in the $740 million financing of the greenfield 850MW combined cycle gas-fired power plant through two private placements and a term loan. “I was personally skeptical about private placements,†says Mueller. “But there turned out to be a lot of interest.â€
Lower interest rates helped. Mueller admits he was concerned that interest rates would rise after the presidential election. “But it turned out to the contrary,†he says.
As for future energy projects, Mueller sees some uncertainty about the government’s policy concerning private-sector energy investments. Mexican President Andrés Manuel López Obrador has rolled back some of the 2013 energy reforms that were friendly to the private sector. “The public sector doesn’t have the resources to do it all alone,†he says.
LATAM OFFICES: São Paulo
HEAD PARTNERS: Gianluca Bacchiocchi, Fabricio Longhin, Jonathan Zonis (Latin America Practice); Anthony Oldfield, (Managing Partner, São Paulo)
Clifford Chance has worked on many of Latin America’s significant infrastructure deals over the past year. These range from Colombia’s Autopista al Mar 1, where it advised such institutions as Sumitomo Mitsui Banking Corp., KfW, Société Generale, and FBN, to Peru’s Internet para Todos, where it advised IDB Invest and CAF. The firm also advised Mizuho for the Lima Metro Line 1 expansion.
But this year’s recognition also highlights the firm’s work in lesser developed markets like Argentina, where it worked with IDB and the country’s Public Private Partnership unit to put together the framework that was used to auction six toll roads and will likely be employed for other roads and social assets, including a possible railway, according to Guido Liniado, a Clifford Chance partner.
This approach is part of an overall “early involvement†strategy, according to partner Fabricio Longhin. Even before Argentina announced its renewable energy program, RenovAr, Clifford Chance was already at work, he says.
“Rather than wait for the regulation to come out, we approached the government and told them we could help,†says Longhin. “We took the step to tell them what has been done. We have experience all over the world on renewable energy.â€
In exchange for developing a bankable power purchase agreement structure, the firm wanted to be involved in subsequent transactions, especially given the concerns about the economy and political climate in Argentina. When the government agreed, Clifford Chance worked with the IFC to design a model PPA and associated documentation.
“We closed on around 20 financings and are working on more,†says Longhin. “On the six road concessions that were auctioned, we’re advising the lenders on the six of them.â€
The firm is pursuing a similar strategy in other Latin countries, including Colombia and Paraguay.
As for the current landscape, Clifford Chance reports a growing interest from institutional investors, both local and global. Rather than taking a passive role, the firm is building its own infrastructure teams and taking a proactive stance.
“The underlying shift in the market is the really low yields in safe assets in the US and emerged countries,†says partner Catherine McCarthy. “Everybody decided that safer, higher quality infrastructure assets in Latin America are offering an acceptable alternative from a risk perspective that have a much higher yield.â€
She adds: “It started with a bit of a trickle. But I’m getting calls from people I would have never expected to hear from. That’s how much this whole group of investors is opening their eyes and looking at Latin project finance as an asset class.â€
Whether the deal flow expands with the new demand is another question. While Argentina elections and pension reform in Brazil have lent uncertainty to the market, McCarthy says the bigger concerns are the US-China trade dispute and the possibility of a no-deal Brexit.
“How the market will go depends a lot on these macro trends,†she says.
Of all the deals that Itaú BBA handled last year, one of the more challenging was the financing of the EDP transmission line project. The BRL1.2 billion ($312 million) project was financed entirely through debentures, the single largest infrastructure debenture in the Brazilian market so far.
The 10-year financing had an uncommonly large balloon payment at the end and was more highly leveraged than traditional deals, according to Marcelo Girão, head of project finance at Itaú BBA. He pointed out that 90% of the project was financed with debt, with 10% equity. The customary ratio is 80/20, he says. EDP’s construction guarantees helped. “It was a very stable project,†says Girão.
What’s more, Itaú BBA used its balance sheet to anchor the issue. It absorbed 90% of the issue and kept the asset on its books before selling pieces on the secondary market, according to Girão.
The transaction was further complicated because of the looming presidential election in Brazil. “There was some uncertainty about who would be the winning candidates,†says Girão. “We bet that things would get better when selling on the secondary market. Fortunately, things are going well.â€
Itaú participated in another deal that had its own unique features, the TAG pipeline. The $8.6 billion acquisition of Petrobras’ pipeline was one of the biggest deals and largest divestment by the state-owned company. It was also complex, with dollar- and real-denominated debt.
The deal also faced a legal dispute that challenged Petrobras’ authority to sell a state-owned asset. In the end, the Supreme Court of Brazil ruled in favor of the oil company. More importantly, the ruling allowed the government to proceed with its privatization plans.
“Fortunately, the decision was a correct one from a market perspective,†says Girão. “It was very important transaction to show to the market that future transactions from Petrobras are safe.â€
In another challenging year for project finance in Latin America, Santander showed its geographic reach as a financial advisor on deals across the region and topped the 2018 league tables, when measured by deal values.
“For us, 2018 was a year when we were finally able to close several transactions that we had been working on for months or years,†says Benoît Felix, the global head of structured finance at Santander CIB.
“Given the context in Latin America, we are seeing that projects take more time to close and we’re seeing more volatility in the pipeline,†he adds.
In Peru, Santander advised the Sacyr-led concessionaire Vial Sierra Norte on the $322 million refinancing of the second phase of the Longitudinal de la Sierra 2 toll road. While in Colombia, it helped Sacyr’s Vial Unión del Sur find financing for the Rumichaca-Pasto toll road, part of the fourth generation (4G) of highway concessions.
Looking ahead, Felix sees increasing activity in Brazil and he also expects growth in energy and transportation projects in Chile, while some opportunities might appear in Panama.
“We’ve been very busy in Brazil,†he says. “We are seeing the emergence of infrastructure debentures. This market has literally exploded. There is very good momentum in Brazil.â€
Deal flow in Colombia could also pick up next year, while a “decent†pipeline for renewable energy projects is developing in Mexico, Felix says.
Natixis was a leading player in Mexico’s renewable energy loan market this past year, providing financing for a range of projects from solar to wind farms.
By far, the most ambitious was Enel’s Green Power’s Villanueva I and III solar plants and the Don Jose renewable energy initiative in Mexico. The 469 MV Villanueva I and 359 MW Villanueva III are located in the northern region of Coahuila, while the 238 MW Don Jose was built in Guanajuato.
The 992 MW capacity of the solar portfolio makes this financing the biggest renewable deal in Mexico. The projects will sell their energy and clean energy certificates (CELs) under a 20-year PPA with Comisión Federal de Electricidad. Natixis was a bookrunner for the 18-year, $610 million project finance loan.
Another notable project was the El Llano project, a 375MWp solar PV power plant to be built in Mexico’s Aguascalientes region, Mexico. Natixis participated in the syndicated $300 million loan for project sponsor Neoen, a French producer of renewable energy.
In the Yucatán Peninsula, Natixis and Crédit Agricole provided a $110 million secured short-term loan to EnergÃa Renovable de la PenÃnsula for a 90 MW wind farm. The PenÃnsula wind farm started operations in the first quarter this year.
Vive EnergÃa developed the PenÃnsula project with its partner, China’s Envision Energy, after winning 15-year clean energy certificates and 20-year power purchase agreements from Mexico’s wholesale power administrator Cenace in the first long-term power auction in March 2016.
Bow Power, a joint venture between Spain’s ACS and the US investment fund Global Infrastructure Partners (GIP), entered the project through a partnership with Envision in July last year.
HEAD BANKER: Luis Fernando Perdigón
Long ago, Sumitomo Mitsui Banking Corp. (SMBC) set out to be a major player in Colombia’s 4G program to construct 30 new roads. Last year’s Autopista al Mar 1 was its sixth transaction.
“This is one of the biggest efforts we have done in years in Colombia,†says Luis Fernando Perdigón, head of project finance for Latin America at SMBC. “We decided we wanted to be the top bank in that space. We’ve spent a lot of time understanding the program with the government, the national infrastructure agency and FDN, the national development bank, and becoming comfortable with it.â€
SMBC was financial advisor and structuring bank for Mar 1, one of the largest non-recourse project financings in Colombia’s history. It was also one of the most complex, involving international banks and multilateral agencies and multiple currencies.
SMBC was also instrumental in attracting institutional investors to provide local currency, according to Perdigón. The Odebrecht scandal limited the appetite of local banks.
Even though the deal was unfolding during a challenging investment climate in Colombia triggered by investor unease over Avianca Airline’s financial problems, sponsors secured almost COP2.2 trillion ($713 million) for Mar 1.
SMBC was also a lead mandated arranger for the $775 million loan by Brookfield Infrastructure and Digital Realty to fund the $1.8 billion purchase of Brazil’s Ascenty Participacoes, a data center platform in Brazil. Ascenty is the leading data center provider and telecom company in Latin America, specializing in colocation, connectivity and cloud computing. It was the first data center transaction in Latin America for SMBC.
Though uncertainty surrounding elections in Brazil, Mexico and Colombia depressed deal flow last year, Perdigón says the climate has improved. He cites a burst of activity at the beginning of 2019, reflecting a surge of deals that had been on hold. Activity continues to pick up in Brazil and Peru, while Colombia is stable, according to Perdigón.
