FINANCING TRANSPORTATION INFRASTRUCTURE IN SPAIN: SUCCESSFUL SCHEMES AND CASE STUDIES U.S. - Spain...
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Transcript of FINANCING TRANSPORTATION INFRASTRUCTURE IN SPAIN: SUCCESSFUL SCHEMES AND CASE STUDIES U.S. - Spain...
FINANCING TRANSPORTATION INFRASTRUCTURE IN SPAIN: SUCCESSFUL SCHEMES AND CASE STUDIES
U.S. - Spain Forum on transportation & housing finance
Washington, November 2002
Index
I.- Caja Madrid: A Brief Overview
II.-Transportation Concessions in Spain: Successful Schemes
III.- Financing Transportation Projects
IV.- Case Studies: M-45 / R-2
I.- Caja Madrid:
A Brief Overview
Caja Madrid
In Spain:
The oldest bank (300 years)
2nd largest Savings Bank and 4th largest universal banking group (with assets aprox. € 66.7 Billion.)
Strongest market share in the Madrid Region: 16% (6% share of the Spanish market). Overall solid and profitable retail franchise
Sound core business. Low-risk business profile
Strong expansion, growth and diversification over the last five years
Today: Caja Madrid´s Business Structure
FOUNDATION SOCIAL WELFARE
Comercial Banking Investment Banking Other Busineses
Retail
Two Networks:
SME´s
Real Estate developers
Private Banking
- Periphery- Madrid region
Treasury
Capital Markets
IFI´s
Corporate Finance
Industrial Portfolio
Asset Management
E- business
Venture Capital
Real Estate
Bank Assurance
NH-AHORA
Caja Madrid Group 2001 CONSOLIDATED HIGHLIGHTS & CREDIT RATINGS
AA-
Bis Ratio
Efficiency Ratio
Coverage Ratio
Bad Loans Ratio
12,5%
46,4%
245,2%
0,68%
1999 2000 2001
50.663.2
66.7
Total Assets
1999 2000 2001
373437
486
Attributable Profit
(In Euro billion) (In Euro million)
A-1+
Aa2
P-1
AA
F1+
LONG TERM
SHORT TERM
Top mandated arrangers of European project finance loans (October 2002)
Westdeutsche L. Girozentrale 1,356.48 5 11.2
Abbey National plc 349.66 5 2.91
Barclays Bank 1,080.32 6 8.98
Societé Generale 951.02 5 7.91
Royal Bank of Scotland 875.84 7 7.28
Bank of Scotland 862.13 8 7.17
Mizuho Corporate Bank 687.63 2 5.72
European Investment Bank 427.05 1 3.55
Caja Madrid 358.93 4 2.98
Intesa BCI 355.16 3 2.95
1.-
2.-
3.-
4.-
5.-
6.-
7.-
8.-
9.-
10.-
BSCH 183.98 3 1.53
BBVA 165.01 2 1.37
17.-
18.-
Mandated arranger name Loan Amt ($m) Transactions Share
Loan Portfolio
22,1%9,4%
10,4%
5,4%
17,8%1,8%
11,7%
21,3%
Infraestructuras Energía
Medioambiente Telecomunicaciones
Industria OcioAdquisiciones Activos
77%
9%
11%3%
ESPAÑA EUROPA SUDAMERICA EEUU
INDUSTRY BREAKDOWN GEOGRAPHIC BREAKDOWN
LOAN PORTFOLIO AS OF JUNE 02: € 2.351 billion
Recent Infrastructure Financings
ABRA TERMINALES MARÍTIMAS
ALAZOR INVERSIONES
Construction and Operation of containers terminal in Bilbao Harbour
69.5
CLIENT / PROJECT PROJECT DESCRIPTION VOLUME (€ million)
Bridge financing for Madrid R3 and R5 roads 181
AUSOLConstruction and Operation of Estepona-Guadiaro toll road 150.2
INFRAESTRUCTURAS Y RADIALESConstruction and Operation of R-2 toll road and M-50 beltway road
424.0
INFRASPEEDHigh speed rail link between Amsterdam and Belgium border
1,200.0
GRANDE OPORTO Shadow toll road (Portugal) 700
LUSOSCUT - AUTOESTRADAS DA COSTA DA PRATA
Mira - Oporto road (Portugal) 432.7
Recent Infrastructure Financings
IBERPISTAS
NORSCUT, CONCESIONARIA DE AUTOESTRADAS
Construction and Operation of A-6 Avila-Segovia toll road
300.0
CLIENT / PROJECT PROJECT DESCRIPTION VOLUME (€ million)
Viseu - Chaves road (Portugal) 697.0
LUSOSCUT, BEIRAS LITORAL E ALTA
IP-5 road (Portugal) 967.0
MEPSA Barcelona Harbour chemicals pier 20.4
RUTA DE LOS PANTANOS Madrid “Pantanos” road 70.1
SCUTVIAS, AUTOESTRADAS BEIRA INTERIOR 746.0
UTE ARCO SUR GC-1 road in Gran Canaria 60.1
Abrantes - Guarda road (Portugal)
Recent Infrastructure Financings
AUTEMA
CONCESIONES DEL ELQUI CONCESIONES DE LOS LAGOS
Terrasa - Manresa road 160.0
CLIENT / PROJECT PROJECT DESCRIPTION VOLUME (€ million)
Los Vilos - La Serena toll road (Chile) 338.4
CONCESIONES DE MADRID Madrid M-45 motorway 135.8
UTE CANALS AGULLENT Canals - Agullent road 40.4
CINTRA New investment financing 360.3
EUROTUNNEL 343.0
ONTARIO OTR 407 Ontario 407 by pass $C 3,200.0
Channel Tunnel
Recent Infrastructure Financings
UTE NUENO-HUESCA
UTE SAN VICENTE
Nueno-Huesca road financing 21.9
CLIENT / PROJECT PROJECT DESCRIPTION VOLUME (€ million)
Cantábrico road financing 99.1
TRANSPORTES FERROVIARIOS DE MADRID
Madrid-Arganda suburban train 107.0
TAFIRA UTE Tafira by pass 26.4
AUTEMA Terrasa - Manresa road financing 72.0
AUSOL 361.0
ARPEGIO-METRO DE MADRID 261.4
Málaga-Estepona toll road
Expansion of Madrid´s underground system
II.-Transportation Concessions in Spain: Successful Schemes
General Considerations
Basic regulatory framework for private sector participation in infrastructure projects dates back to 1972 (Law 8/1972 establishes legal framework for the construction, operation and maintenance of roads under concession schemes)
Further developments since 1972 have provided a stable and reliable framework for investors and lenders
A bill currently under consideration will consolidate and strenghen the concession system
A key element is the strong support and involvement of the Spanish Administration
Goals of regulatory efforts
Assumption of key risks by private sector
- Construction
- Operation & maintenance
- Traffic
- Financing
Affordable tolls
Mobilisation of large amounts of private financing into infrastructure projects
Reallocation of Public Sector financing priorities
Successful Concesion Schemes
Shadow toll concessions
Real toll concessions
Common Features
Strong government support, typically involving:
- Concession agreement whith government undertakings
- Maintenance of economic and financial equilibrium
- “Responsabilidad Patrimonial” (Compensation upon early termination of concession)
Specific terms (tenors of concessions, bidding criteria, maximun tolls, potential subsidies,etc) on a case-by-case basis
Maximun concession tenor of up to 75 years
Main Features of Shadow Toll Concessions
Granting authority (either central government or regional authorities) makes payments to the concession company according to the use of the road
Payments made by granting authority are not considered as public indebteness
Tipically, upside for investors is limited (reduction of toll payments upon achieving certain traffic volumes; reduction of concession tenor upon meeting certain returns, etc)
Traffic is more predictable
Lower traffic uncertainty may allow for more efficient financing schemes (bond financing and securitisation)
Main Features of Real Toll Concessions
Tolls payable by users
Higher traffic uncertainty
Typically, upside for investors is not limited
Financing structure typically more conservative
Toll Roads in Spain
III.- Financing Transportation
Projects
Financing Transportation Projects
Up to date , infrastructure projects in Spain have been mostly funded by banks due to the competitiveness and flexibility of such financing:
- Willingness to provide long tenors
- Competitive pricing
- Consistent with high leverages
- Willingness to evaluate and assume traffic risk
Banks willingness reflect:
- Comfort with regulatory framework and strong involvement of the Administration
- Successful track record of toll road concessions
- Users acceptance of toll roads (annual ADT in toll roads has increased by 4,93% and 7,01% in the periods 1981-2000 and 1995-2000, respectively)
Financing Transportation Projects
However, Capital Markets funding (Bond finanicng an securitisation) will become increasingly popular due to:
- Need of longer tenors
- Bank financing will not be enough to meet needs derived from the 2002-2007 infrastructure plan
- Implications of BIS capital requirements on banks
- Regulatory support (Concession bill facilitates capital markets transactions)
Initially, “Wrap-Ups” from monolines will play a key role (Ex. Pamplona-Logroño toll road; Ruta de los Viñedos)
IV.- Case Studies:
M-45 / R-2
Radial 2 Toll Road
Part of a network of four access roads to Madrid from suburbs (high proportion of conmuting traffic).
Ministerio de Fomento (Ministry of Public Works/Development)
80,9 Km real toll road, from Guadalajara to the M-50, Madrid´s third untolled beltway. The R-2 will go parallel to the N-II, an untolled road connecting Madrid to Zaragoza and Barcelona. A key feature is the obligation to build, free of charge, a portion of the untolled M-50.
Granting Authority
Description
Radial 2 Toll Road
Dragados Group and Acciona
Under construction (expected commercial operation: 2nd half 2003); financial close in mid-2002
Key Sponsors
Status
Concession Tenor 24 years
Tolls Maximun levels established in concession agreement. Adjusted by inflation
Radial 2 Financing Structure
Debt/Equity
Approx. € 500 millionTotal Project Cost
85/15. In Addition, a small contingent line of credit and equity has been committed to cover initial cash flow deficits
Debt/Tenor 21 years (Tenor may be reduced by one year if concession tenor is not extended by one year)
Average Life 16.6 years
Syndication Led by Caja Madrid, with BBVA and Banesto as co-lead arrangers, and syndicated among 27 banks
M-45 Shadow Toll Road
Partial Beltway in Madrid, split into three tranches awarded to three different consortia
Granting Authority Comunidad de Madrid (Madrid´s Regional Government)
Description 14,1 Km shadow toll road, from the N-II untolled road to Eje O´Donell (R3)
Key Sponsors Acciona, Dragados Group, FCC
M-45 Shadow Toll Road
Original Conccesion Tenor
25 years
Tolls Payable by the granting authority according to usage. However, revenues in excess of a predeterminated annual level do not generate payments (i.e. the sponsors´ IRRs are capped
Status In commercial operation since mid. 2002. Financing closed in 2000.
M-45 Financing Structure
Original Total Project Cost
Debt/Equity
Debt/Tenor
DSCR
DEBT Participants
Approx. € 131 million
85/15. In addition, a € 26 million contingent line of credit was committed to cover potential construction modifications requested by the granting authority
22 years, back-ended amortizacion profile
1.25 (minimum and average)
Banking tranche and EIB/EIF tranche, guaranteed by banks