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Colombia's FDN drafts securitization plans for 4G loans

Jul 27, 2017

The Colombian development bank plans to buy loans for Colombia's 4G toll road program and sell them as bonds in the capital markets

Mick Bowen

Keywords: colombia 4G colombia toll road program

Colombia's development bank, Financiera de Desarrollo Nacional, plans to start securitizing toll road loans next year, giving banks more room to provide credit to the next round of projects, CEO Clemente del Valle told LatinFinance.

The bank, known by its initials FDN, will buy long-term loans, especially from local banks, and sell them as bonds in the capital markets, he said.

FDN also expects projects sponsors to rely more on mini-perms to finance projects in the 4G toll road concessions program. "Mini-perms are a solution to attracting banks and retaining them, which is why they are starting to be attractive to sponsors," del Valle said.

Not faced with the same restraints as international banks from Basel III requirements, local lenders have granted mostly long-terms loans for 4G roads, but del Valle said one or two banks could move to mini-perms.

FDN will also supply hedging mechanisms to draw more international banks to the 4G program. The bank expects to provide currency hedges for two of the nine projects that could reach financial before the end of the year, del Valle said.

"The advantage [of mini-perms] is that they bring in more banks," he said, adding that a Spanish and a Canadian lender have come to finance toll road concessions in Colombia.

FDN is also in discussions with five commercial banks and two multilateral lenders to provide between $500m and $800m in peso-denominated loans for foreign banks to fund 4G projects. International banks will likely increase their slice of 4G financing to 25% to 30% from 20%, del Valle said. Eight of 32 4G roads have reached financial close so far, he said.



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