GACM, Banobras ponder PPP structures

GACM, Banobras ponder PPP structures

Project & Infrastructure Finance Mexico

GACM has hired Banobras as financial advisor to structure several works as potential public-private partnerships (PPPs), according to sources familiar with the developments.

The Mexico City airport concessionaire is looking to potentially deploy PPP structures for a MXN5bn ($267.4m) cargo terminal, a MXN2bn hydrocarbons storage facility, a MXN1.2bn wastewater treatment plant and a MXN1bn solar photovoltaic power plant.

Mexican development bank Banobras is still in the early stages of evaluating the projects and the type of PPP format to be applied.

GACM has so far issued a total of $6bn in cross-border bonds, including $4bn in September last year and $2bn in September 2016. It also raised MXN30bn by providing roughly 20% of its equity capital through a Fibra-E IPO in March this year. A five-year $3bn revolving credit facility and a $1bn mini-perm were also secured in August 2015, although they have been partially repaid through the bond sales, one of the sources said.

In addition to MXN1.25bn that have been secured in public funds, this takes the total amount of financing available to just below MXN9bn, according to a second source. The project is valued at approximately $13bn, excluding the PPPs.

The new airport's terminal, its associated infrastructure and three runways are expected to reach commercial operation around 2020-2021, according to one of the sources. As of July, it had reached a 31% completion rate. A second phase contemplating another terminal and three additional runways will be assessed in about 10 years and a target date for completion is 2036.

In July, Mexican President-elect Andres Manuel Lopez Obrador suspended the four contract tenders of the airport in order to more closely review them. Three possible courses of action exist, according to the source. The first one entails continuing the project as it is, the second involves converting the project into a private concession fully financed with private funds and the third would entail building the terminal near the Santa Lucia military base. The last option is the least likely given potential aerial collision risks with military planes, the source added.