Peru toll road operator issues $520m debt for P3

Peru-based toll road operator Rutas de Lima has issued circa $520m in senior secured bonds in the local and international markets.

Peru-based toll road operator Rutas de Lima has issued about $520 million senior secured bond for a public-private partnership (PPP; P3) toll road project, tapping rising demand in the international market for direct exposure to Peruvian exchange rates, according to a statement.

The bond portion included two issuance: one global PEN tranche, which means it is priced in Peruvian local currency but is settled in dollars. Another tranche is priced in inflation-indexed Peruvian currency, the statement said, without specifying the size of each tranche.

The bonds are underwritten by Goldman Sachs, BBVA, and Creditcorp Capital, and Mayer Brown served as the legal adviser.

The proceeds will be used to cover operating cost of 98 kilometers of existing roads and the construction and operation of 19 kilometers of new roads. The new roads are intended to reduce traffic congestion and increase efficiency of the commercial exchange among Lima, the port of Callao and provinces located to the north, center and south of Peru, according to the statement.

The issuance of the global PEN tranche, which will be fully-funded at closing, provides the project with immediate liquidity for the construction cost, said lead lawyer on the deal Christopher Erckert at Mayer Brown. The deferred funding inflation-adjusted local currency tranche provides disbursement over time so that reduces the negative carry for the project, Erckert said.

Apart from the debt, Rutas de Lima also got about $200 million senior secured loan from Peruvian commercial banks Banco de Crédito del Perú, BBVA Continental and Interbank for the P3 toll road project.

“The local currency commercial bank loan is the most flexible of all (three tranches). For the third toll road, there are significant rights of way that need to be obtained, and there are particular chances of delay in connection with obtaining those rights of way. And therefore, the loans will be disbursed when needed, and not now,” Erckert added.