LatinFinance - September/October 2013 - 35

BEST INFRASTRUCTURE FINANCING,
BRAZIL

CONCESSIONÁRIA
AUTO RAPOSO
TAVARES (CART)
A toll road deal
advanced Brazilian
project funding when
it sold the first large,
widely-marketed infrastructure debenture to
international accounts
For years, Brazilian officials have
schemed ways to deepen the local bond,
or debenture, market. Bankers say the
rules set up by Law 12,431 — known as the
“infrastructure debenture” law — are set to
be as effective as anything in getting more
issuers to opt for the Brazilian markets. The
dramatic reduction in Brazilian interest
rates has also spurred interest in local
fixed-income markets. A 2013 pipeline
featuring Oi and parts of Cosan suggests the
debentures are indeed catching on.
The 750 million real ($370 million)
transaction from Concessionária Auto
Raposo Tavares (CART) was not the first
infrastructure debenture, nor the first to
be widely marketed. But it broke ground by
being the first to put all — rather than just
a slice — of a large, widely-marketed deal
under Law 12,431.
It was also the first to include
participation from foreigners. Local
individual buyers and foreigners benefit
from certain tax waivers under the law,
as long as the proceeds are used for
infrastructure.
Though Brazil’s government has since
waived the IOF tax for foreigners on any
bond transaction, securing international
buyers was an important step at the time. It
was a challenge to hook unfamiliar foreign
investors for a real-denominated project
bond, sold through the Dutch auction-style
bookbuilding process of Brazil’s debenture
market. CART elected not to channel
foreign buyers through a 144a designation.
“The response abroad exceeded our
expectations,” says Marcos Rocha, chief

financial officer of Invepar, the Brazilian
infrastructure specialist that controls
CART.
Cancelling the IOF tax for all foreigners’
debt investments could diminish the
appeal of the infrastructure debenture,
Rocha says. However, the enormous
liquidity available in international
accounts still makes then a formidable
source of funding, he says.
The deal was split into two 12-year
tranches. A 380 million real deal sold to
international investors offered 5.8% over
inflation rate IPCA, and a 370 million real
portion, which went to domestic buyers,
came at 6.05% over IPCA. Both tranches
saw much lower yields than the 8% spread
ceilings, thanks to demand of more than
2 billion reais. Banco do Brasil, Banco
Votorantim, Bradesco and HSBC managed
the sale, single-A rated on a national scale.
The proceeds helped repay BNDES
funding received in 2011 by the operator
of roads in the states of Mato Grosso, Mato
Grosso do Sul, Paraná and São Paulo.
Replacing BNDES sourcing is exactly
what the creators of 12,431 had in mind.
While Invepar considers several sources
depending on project specifics and market
conditions, it fully counts infrastructure
debentures in its funding arsenal going
forward.
“It is now part of our analysis,”
Rocha says. “It went very well, and the
pricing we got shows this. At Invepar the
infrastructure debenture is a product
that we consider among our funding
options.” LF

LONG HAUL: International investors were drawn into CART’s
infrastructure debenture

BEST INFRASTRUCTURE FINANCING,
ANDEAN REGION

VÍA PARQUE
RÍMAC
Local bond investors
and banks put forward
strong support for
Peru’s largest project
bond, funding a toll
road through Lima
When the City of Lima planned the muchneeded Vía Parque Rímac road project,
officials were aware it would likely be its
largest-ever public-private partnership
(PPP) and one of the biggest ever project
financings in Peru. They did not know
that it could be done entirely with local
investors.
The participation of domestic bank and
institutional investors makes the deal stand
out in a competitive category. It gave it an
edge over other strong candidates in the
Andean region, including a $534 million
loan for Peru’s largest private hydroelectric
plant, Cerro del Águila, and a $390 million
loan for the expansion of Bogotá airport, El
Dorado.
In a testament to the growing strength
of the local investor base, domestic
buyers subscribed the full 1.4 billion soles
($527 million) in the Vía Parque Rímac
transaction. That was split between a
217 million sol 10-year bank tranche and
two 1.18 billion sol 25-year bond issues.
Institutional investors, insurers and the
Cofide development bank participated
in Peru’s largest PPP to date, all with no
government guarantee.
Initial plans to finance the project, being
built by Brazil’s Invepar, included local
and international tranches. But domestic
appetite was much greater than expected.
“When we did the Lima and
international roadshows, we noticed two
things,” says Marcos Rocha, chief financial
officer of Invepar. “The international
tranche seemed too small for international
buyers. When we spoke with the
institutions in Peru — pensions, insurance
companies, local banks — we saw the
opposite. Their appetite was very big. So we

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