Recommended
More Related Content
What's hot
What's hot (20)
Similar to A new approach to infrastructure financing in Colombia
Similar to A new approach to infrastructure financing in Colombia (20)
Recently uploaded
Recently uploaded (20)
A new approach to infrastructure financing in Colombia
- 1. Clemente del Valle, FDN President, April 2014
- 3. 3 The most problematic factors for doing business Percent of responses Source: The Global Competitiveness Report 2013-2014 © World Economic Forum 20.2 14.6 12.2 8.1 8.1 7.7 7.4 6.3 3.3 2.8 2.4 0 5 10 15 20 25 Corruption Inadequate supply of infrastructure Inefficiente gobernment bureaucracy Access to financing Crime and theft Tax rates Tax regulations Restrictive labor regulations Inadequately capacity to innovate Insufficient capacity to innovate Poor work ethic in national labor force Indicator Rank/ 148 Quality of overall infrastructure 117 Quality of roads 130 Quality of railroad infrastructure 113 Quality of port infrastructure 110 Quality of air transport infrastructure 96 The Global Competitiveness Index
- 4. 4 Solid and sound fiscal and macro environment Institutional framework development PPP standard contract Bankable project pipeline Infrastructure financing Top-notch projects
- 5. 5 USD 27 billion 40 projects Over 8,000 km
- 6. 4 Scope Term Project Structure Revenues • Design • Rehabilitation, construction and/or improvement • Operation and maintenance • Financing • Variable – Between 25 and 30 years • Project divided in Functional Units: Infrastructure units with functional independence • Percentage of revenues once a functional unit is finished • Functional Unit Size: Capex + Opex over ~US$ 50 million per Unit • Three sources: Tolls, Government Availability Payments and Commercial Revenues • All sources are subject to availability discounts (Indicator for availability, service levels and quality standards). Discounts are capped at 10% • Ongoing evaluation of quality standards and service levels per Unit by an independent engineer, hired by ANI
- 7. • The Government approved 25% of total availability payments of all the projects in USD Availability Payments in USD • There are partial availability payments when the investment made by the concessionaire in the estimated construction period is equal or more than 40% of the total investment and the cause for the incompletion is not attributed to the concessionaire Partial Availability Payments • The government guarantees the toll revenues through compensations of the difference between the expected and the real toll revenues in years 8, 13, and 29 Toll Revenues Compensation • The government assumes part of the cost overruns in land acquisition, environmental license, and utility networks Between 20%-100%: 70% Above 100%: 100% Cost Overruns • The contract allows the concessionaire to start the construction phase after possessing the land equivalent to the 40% of the length of the corridor Land acquisition threshold • The Government recognizes in a termination formula all the investment made until termination date discounting the received revenues. That formula covers the value of debt in the most critical periods Termination value
- 8. FDN: Colombia’s development bank 8
- 9. Advisory Services Financial Products Leveraging with • Project structuring • Proposal evaluation • Financial evaluation • Studies • Project management • Senior debt • Subordinated debt • Liquidity guarantees • O&M bond (partial guarantee) • Construction bond (full wrap) FONDES
- 10. USD 230 million USD 50 million USD 120 million • Investment grade country with strong economy prospect • Multilaterals with strong shareholders commitment to infrastructure development in Colombia
- 11. • With IFC, CAF and prospective private investors, FDN’s equity will increase 2.4x, from USD 230 million to USD 550 million approx. • By the end of 2015, FDN will have provided approximately USD 2.5 billion in financing for infrastructure, up to USD 150 million per project • FDN will have also mobilized up to USD 10 billion in financing for infrastructure in Colombia during its first two years of operations
- 12. 12 Our focus: • Financial products • Regulatory changes • Pilot projects • Training programs • Project finance standardization FONDES USD 2.5 bn LOCAL BANKS USD 13.5 bn LOCAL INVESTORS USD 12.5 bn INTERNATIONAL BANKS USD 1.8 bn INTERNATIONAL INVESTORS USD 1.8 bn MULTILATERALS USD 1.5 bn USD 2 bn
- 13. Mobilizing resources for infrastructure financing 13
- 14. 14 Players Concessionaires Concerns FDN solutions Competitive sources of funding • Senior long-term debt • Sub long-term debt Banks Liquidity and refinancing risk • Guarantees • O&M bond Institutional investors Construction risk • O&M bond • Construction bond • Debt fund
- 15. 15 Construction Operation and maintenance International + local banks debt Local banks debt Multilaterals debt USD FDN subordinated and senior debt 7y 12-15y 18y 20y Benefits: • Cushion for senior debt • Longer repayment period • Debt service flexibility according to cash flows
- 16. 16 Construction Delays Operation and maintenance Bank and multilateral debt Guarantee for interests exceeding initial scheduled payments Cash sweep amortization after senior debt Benefits: • Reduces contingent equity • Mitigates uncertainty in debt service payments • Provides additional resources to finance construction during delays
- 17. 17 Construction Operation and maintenance Loans -Local and global banks loans -A/B loans through multilaterals -Guarantees securitization of the project upon completion • Senior: institutional investor engagement • Subordinated: FDN + multilaterals • FDN’s partial liquidity guarantee Benefits: • Project cash flow better aligned with liabilities • Structures can be standardized and replicated • Competitive rates due to low credit risk • Issuance in tranches
- 18. 18 Construction Guaranteed Project Bond: >[20] years Operational Phase; >[20] years Time CashFlows (+ ) (-) Cash flows generated Construction Operation and maintenance Benefits: • Limited refinancing risk • Long-dated inflation-linked COP asset • Opportunity for yield pick up • Limited counterparty risk (triple-A rated guarantors) Syndicated full wrap guarantee
- 19. 19 Construction Operation and maintenance Loans - Local and global banks loans - A/B loans through multilaterals - Guarantees Debt fund with a component in USD and COP FDN is considering issuing a partial credit guarantee to cover interest payments in the event of construction delays Initial commitment Benefits: • An experienced general partner • Financial commitments to refinance projects through senior debt or bonds
- 20. FDN can provide an opportunity for international players to: • Participate in world-class infrastructure projects in Colombia • Participate in innovating financial product to mobilize capital for infrastructure • Understand regulatory framework for project finance • Bring together concessionaires with international players to finance infrastructure • Share successful experiences with other markets
- 21. 21 THANK YOU
- 22. 4 Sponsor Risks • Construction (except tunnels) • Operation and maintenance • Financing • Change in construction and operation & maintenance input prices • Land acquisition management (with supervision of ANI) • Insurable Force Majeure events • Traffic (liquidity risk) • Macroeconomic risks Shared Risks • Construction (tunnels) • Land acquisition (cost overruns) • Environmental and social management (overruns in environmental compensations) • Utility networks (overruns) ANI Risks • Force Majeure events • Non insurable events (e.g. natural disasters) • Delays in land acquisition • Delays in social consultation • Delays in environmental licensing • Traffic (Aggregated Income) • Utility networks (non identified networks) Risk Distribution