Lima Metro concessionaire sells new notes

Lima Metro concessionaire sells new notes

Bonds Debt Capital Markets Fixed Income Project & Infrastructure Finance Peru

The concessionaire for Line 2 of the Lima Metro has sold $563m in bonds to finance construction of the second line of the capital city's public transit system, LatinFinance has heard.

The bookrunners Goldman Sachs and JPMorgan priced the 17-year notes at par to yield 4.35%, said a debt capital markets source in Lima.

The consortium, which includes ACS and FCC from Spain, Salini Impregilo and Hitachi Rail STS from Italy and Cosapi from Peru, backed the bonds with RPI-CAOs, or guaranteed payment obligations from the government.

The group had planned to issue $549m in bonds, but it increased the offer on high demand. It has said it will use the money to fund construction and to pay off some of the $1.15bn in 2034 notes that it issued at 5.875% in June 2015.

S&P Global gave the notes a BBB rating, one notch below Peru's sovereign rating, saying the payment structure limits the risks of revenue shortfalls. Moody's assigned the notes a Baa1 rating with a stable outlook.

The 35km Line 2 is expected to cost roughly $5.6bn. It is the first underground line of what will be a five-line transit system in the capital city. Line 1, which opened in July 2011, is above ground.

The private investment agency Proinversión is expected to announce the procurement schedules for Line 3 and Line 4 by the end of the year. The combined project costs for the two subway lines are estimated to be around $10.6bn.

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