ACP: Multilaterals likely to play bigger role in project finance

Friday, December 12 2008 @ 09:47 PM UTC

Contributed by: Don Winner

By Renzo Dasso, Business News Americas - The Panama Canal Authority (ACP) foresees that multilateral agencies will play a bigger role in the project finance industry, ACP financial management head Enrique Márquez told BNamericas. "It would not be surprising if such a trend develops, since the origin of these agencies thrives on common issues and interests around the world," Márquez said. "Given the current economic crisis, they represent a source of funding which is readily available to the project finance industry," he added. The credit crunch caused by the global financial crisis at the beginning of the third quarter has prompted multilateral agencies to fill the space left by commercial banks, which have withdrawn from the market by restricting credit. (more)

PANAMA CANAL FINANCING STRUCTURE

In a scenario where there is no long-term credit from commercial banks to finance large projects, such as the US$5.25bn Panama Canal expansion, the participation of multi laterals has become fundamental.

On December 9, ACP and five multilateral agencies formally signed the agreement for the US$2.3bn financing package that will cover a portion of the project to expand the waterway. The remaining resources for the project will be financed by ACP through Canal-generated cash flow.

"Since the start of negotiations, ACP stuck to the objectives established for the financing strategy for the expansion program, whereby the facility had to be unsecured, untied, with no guarantee, with a 20-year term and a 10-year grace period," Márquez said.

The financing package also had to guarantee no interference with ACP operations or the expansion program, as well as provide competitive pricing, he added.

"The participation of these agencies in the partial financing [of the expansion project] was based on their willingness to work with ACP within these parameters," Márquez said.

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