Astris Finance is pleased to announce that Lima Metro Line 2 Finance Limited successfully priced a USD 1.155 billion bond on June 10, 2015. The bond, which settled on June 17, will contribute to the financing of the Lima Metro Line 2 Project (“the Project”).

THE SPONSOR GROUP

The Project is being developed by a consortium formed by ACS-Iridium and FCC of Spain; Salini Impregilo, Ansaldo STS and Ansaldo Breda of Italy; and Cosapi of Peru (“Consortium”). The Government of Peru (“Grantor”) adjudicated the Project to the Consortium on March 28, 2014 pursuant to an international public tender.

THE PROJECT

The Project is one of the most ambitious infrastructure endeavors ever launched in Latin America under a concession framework. Under the 35-year concession agreement, the Consortium-sponsored concessionaire (“Concessionaire”) will build 35 km of subways, including 28 km for Line 2 and 7 km for the first segment of Line 4. The Project will comprise 35 stations and will be served by 42 driverless trains.

The Project will connect the densely populated northeastern neighborhoods of Ate Vitarte to the central business area of downtown Lima including the Callao district in the southwest. Upon opening, up to 660,000 Lima residents are expected to use the Project every day. Riders who travel the entire distance of Line 2 will save more than 60 minutes in each direction, reducing travel time from over 2 hours currently to less than 45 minutes.

THE FINANCING PLAN

Astris has been acting as mandated financial advisor to the Consortium since bid stage. For the past 18 months, Astris has worked with the Consortium to develop and implement an optimized financing structure for the Project. The structure includes a USD 320 m revolving construction facility, a USD 2.5 bn+ term financing package as well as a PEN 100 m VAT facility.

The delivery of the Project entails capital expenditures of close to USD 6 bn (including a provision for inflation and additional works), of which about USD 3.7 bn will be paid for directly by the Grantor through milestone-based cash payments. The balance will be financed by the Concessionaire through the term financing package as well as sponsor equity.

Miguel Bermejo, FCC Group’s Finance Director for the Americas, commented: “Since bid stage, we have worked very closely with Astris on a 360-degree approach to the Project’s financial structuring, investigating every possible source of liquidity available for the term financing. We are very happy with the financial structure that was finally implemented, as it combines the best of each financing source in terms of all-in pricing; ability to reduce negative carry; flexibility in disbursement; and certainty and speed of execution.”

This approach resulted in the design and implementation of a term financing package composed of three parallel facilities. Each of the three facilities is structured as a securitization of deferred payment notes known as RPI-CAO (or Retribución Por Inversión – Certificado de Avance de Obras) issued by the Grantor to the Concessionaire as works progress during the construction period. The first of these three facilities to reach financial close, the 144A/Reg S bond has a 19.1 year door-to-door maturity with a 12.8 year average life. Citibank, Morgan Stanley and Santander acted as Global Coordinators. Citibank also acted as billing & delivery agent and indenture trustee, while Santander also acted as advisor. The bond priced at 5.875%.

Astris and the Concessionaire are in the final stage of implementing the other two term facilities, a USD 800 m bank loan backed by SACE, the Italian export credit agency and a USD 450 m credit facility from the private sector finance arm of the Inter-American Development Bank. Closing is expected by Q3/2015.

Fabrice Henry, Managing Director in charge of the deal at Astris, added: “This bond transaction is a landmark achievement for greenfield project finance in Latin America, given both its size and the way it works together with two parallel bank facilities. This illustrates two key features of what Astris brings to infrastructure sponsors as an independent advisor: a complete objectivity in terms of the range of products we can mobilize; and a strong ability to think out of the box and deliver first-of-a-kind, value accretive transactions for emerging market infrastructure projects.”