FDN charts global support for 4G roads

FDN charts global support for 4G roads

Colombia Loans Bonds Project & Infrastructure Finance

FDN wants increased lending from international banks to speed up the financial close on the next 10 toll roads in Colombia's 4G concessions program.

"Right now, nearly 50% of funding comes from Colombian banks, but we want to reduce this to between 40% and 45%," FDN CEO Clemente del Valle told LatinFinance in Bogota.

Foreign lenders have provided 20% of 4G project financing so far, while institutional investors have committed 22% and FDN less than 9%. But the development bank wants international banks to finance between 25% and 30% of project costs for the next round of toll roads, with institutional investors and FDN committing between 15% and 20% apiece, he said.

As del Valle explained, FDN will provide between $500m and $800m in local currency loans to international banks, enabling them to finance projects in Colombian pesos.

"Local banks do not have the structuring expertise in project finance and that is why we need more participation from international players," he said..

He also said multilateral institutions, such as the IFC, will issue peso-denominated bonds to raise funds for 4G toll roads. FDN is also evaluating possible bond sales in the cross-border markets to raise 4G funding next year.

"Next year is when we really start to leverage. For now, it is through the Isagen money," del Valle said. "We want to get more active in the energy sector, so we could look at a green bond or multilateral loans."

FDN received COP2.5tn ($864m) from the government in May last year, part of the proceeds from the sale of power generator Isagen.

The 10 projects due to reach financial close this year involve COP15.8tn in investments, according to a presentation from FDN.

ING, Itau BBA, Banco de Credito del Peru (BCP), Santander and Canadian pension plan Caisse de depot et placement du Quebec (CDPQ) are part of the international banking group for the Pacifico 2 toll road concession. The concessionaire La Pintada, which also counts on Davivienda and Banco de Bogota for local currency financing, has tied up a COP200bn bridge loan to carry on with construction on the 96.5km road.

Spanish bank BBVA is structuring COP1.75tn in financing for Ruta del Cacao, a concessionaire led by Spanish developer Cintra, for the Bucaramanga-Barrancabermeja-Yondo toll road, split between an 18-year facility in inflation-linked UVRs and a 14-year loan in pesos.

Other foreign banks involved in financing 4G projects include Banco Sabadell and Santander from Spain, BNP Paribas, Natixis and Societe Generale from France, Intesa Sanpaolo from Italy and US lender JPMorgan.