Loan Deal of the Year: Petroperú

SPONSOR: Petroperú
FINANCING TYPE & SIZE: $1.3bn loan
BANKS: BNP Paribas, JP Morgan, HSBC, Citibank, Santander, Deutsche Bank
LAW FIRMS: Allen & Overy, Estudio Echecopar, Skadden, Arps, Slate, Meagher & Flom, Muñiz, Baker MacKenzie

Slightly more than a year after a $2 billion bond sale, Petroperú signed a 10-year loan for $1.3 billion to finance renovations to the Talara oil refinery in northwest Peru.

The loan came backed by a 99% guarantee from the Spanish export credit insurance company CESCE and involved 13 international lenders. It was both the largest deal that CESCE had worked on and the largest loan supported by an export credit agency (ECA) in Peru.

“After the bond issuance, we wanted to diversify our sources of funding, take advantage of the fact that we are a government-owned company, the pricing discovery from the bonds and project advancements to maybe obtain a loan,” says Petroperú CFO Mathius Sersen. “We had discussions with insurance companies, investors, and then decided to go with a guaranteed corporate loan structure.”

Petroperú opened talks with seven banks – BBVA, BNP Paribas, Citi, Deutsche Bank, HSBC, JPMorgan and Santander – and wanted to close the loan by April last year. By September, as the negotiations carried on, six more lenders had joined the deal. The state-owned oil company eventually signed the loan in late November.

Having the Spanish engineering companies Grupo Cobra and Técnicas Reunidas involved helped secure CESCE’s participation, according to Sersen.

The loan pays an interest rate of 3.96%, including the cost of the guarantee, or 3.285% without the guarantee. The first payment is not due until six months after the refinery reopens.

And now Petroperú is looking to replicate the loan on a smaller scale, Sersen says.

To raise the remaining $800 million to complete the $5 billion project, Petroperú is seeking a 12-year, $200 million loan, backed by CESCE. It is also considering a $600 million bond sale in early 2020, he says.

The project is 80% complete and is scheduled to start commercial operations in mid-2021, Sersen says.