peruvian infrastructure business opportunities from a financial … · 2016-09-12 · peruvian...

Peruvian Infrastructure Business Opportunities

from a Financial Point of View

XII Reunion Plenaria del Consejo Empresarial Peruano-Japones

Yasuo Takeuchi

Chief Representative - Peru

Sumitomo Mitsui Banking Corporation (SMBC)

Copyright © 2016 Sumitomo Mitsui Banking Corporation. All Rights Reserved. 1

DISCLAIMER AND CONFIDENTIALITY NOTICE

This presentation material (“Presentation”) has been prepared by Sumitomo Mitsui Banking Corporation (“SMBC”) for

informational purposes only and is being furnished by SMBC solely for use by participants.

SMBC makes no representation or warranty as to the accuracy or completeness of any information in the Presentation and

shall have no liability for any representations (expressed or implied) contained in the Presentation or any other written or

oral communications transmitted by SMBC.

Please note that this Presentation is prepared for discussion purposes only and does not constitute, and may not be

construed as, an offer or proposal to provide any financing or services.

The recipient of this Presentation agrees not to divulge or discuss the contents of this Presentation to or with anyone not

within participants, without the prior consent from SMBC. Until agreed otherwise, this Presentation shall remain the

property of, and shall be treated as confidential and proprietary to SMBC.

Copyright © 2016 Sumitomo Mitsui Banking Corporation. All Rights Reserved.

Executive Summary

2

Peru has an attractive investment environment as evidenced by rapid GDP growth,

investment grade, high “ease-of-doing-business” rank, and dollar-based financing.

Peru has successfully procured many Public Private Partnership (“PPP”) projects,

created to promote foreign investment in Peru. A PPP can be accessed either

through a government or private initiative, which depends on whether the project is

born in the public or the private sector.

Current administration has the mission to further promote Peruvian infrastructure

investment and to reduce red tape. Mr. Kuczynski, Peru’s new President has

proposed projects for over $79 Bn to be financed by PPPs (~40%) and with public

resources (~60%). Therefore Japanese companies have many opportunities to

invest and export.

SMBC has extensive infrastructure finance experience and an infrastructure team

of professionals that combines outstanding project finance structuring, execution

and syndication expertise with a deep understanding of the region and a local

presence in 5 countries in Latin America, including Peru.


Why Invest in Peruvian Infrastructure Projects?

3

Bankable Project Finance (“PF”) framework with massive infrastructure

demands:

One of the most bankable PF environments in the region, US dollar-based project

revenues enabling international financing.

No merchant/demand risk for co-financed and strategic projects. Rating agencies

digest such projects as Quasi Sovereign Peruvian Risk.

Infrastructure gap of over USD 159 Bn. For 2016-2017, USD 25 Bn projects are

expected to be awarded through PPP.

Strong & sustainable growth with financial soundness:

Achieved 17 consecutive years of positive economic growth in 2015. One of the

lowest inflation rate in the region.

Solid financials with ample international reserves equivalent to 20 months of

import payment.

Source: Central Reserve Bank of Peru (“Memoria 2015”, “Reporte de Inflacion”, June 2016)

IMF (World Economic Outlook Database)

Rating (S&P/Moody’s) BBB+/A3

Nominal GDP (2015) USD 192 Bn

Real GDP Growth 3.3%（2015） 4.0%（2016 F）

GDP per capita USD 6,021

Foreign Reserve (Dec 2015) USD 61 Bn

Public Debt (Dec 2015) USD 42 Bn

Population 31.2 Mil

Inflation Rate (2015) 4.4%


Why Invest in Peruvian Infrastructure Projects? – continued

4

Key driver of bankable PF – Government Certification of Milestone Work

Completion and market acceptance of Government Backed Securities (GBS)

structure:

Peru started using GBS structures since 2000 and has been since financed:

toll roads,

transportations solutions,

airports,

metro lines,

water sanitation, irrigation facilities, and

hospitals.

Projects have been financed through project finance loans, local and international

bond issuances. International bonds have been rated one notch below Peru’s

sovereign rating and hence investment grade on the international scale.

Rating agencies like FitchRatings* appraised the innovation of a strong institutional

framework and successful execution of the Government of Peru (GOP).

The GOP plans to include social projects: Schools for high-academic achievers

(COAR) and prisons to the list of projects with certificates for milestone completion.

* Source: FitchRatings . Structrured Finance Sep. 23rd, 2014



5

Retribución por Inversiones según Certificado de Avance de Obras (“RPI-

CAO”):

The Retributions for investment according to the certificate of work completion (“RPI-

CAO” have been a successful tool to finance Infrastructure Peruvian PPP projects, on

a milestone basis.

RPI-CAO are the second generation of Certificates from Peru. While the original

(CRPAOs) had a sovereign on balance obligation, RPI-CAO are budgeted annually

per each ministry in charge. The GOP has used other acronyms to certificates from

transportation lately (“CAMPI-PAMPI”). All these certificates have – unconditional

and irrevocable rights of payments from the GOP.

RPI-CAOs are designed to convert project construction and operation risks to

sovereign risk.

RPI-CAO have been historically USD denominated with the exception of Sedapal

(water projects).



6

RPI-CAO framework (I):

Certificate

(CAO 1)

Certificate

(CAO 2)

Certificate

(CAO 9)

Certificate

(CAO 10)

Commercial

Operation Date

(COD) Fixed

Date under

Concession

Agreement

("CA")

1 Milestone 2 Milestone … 9 Milestone 10 Milestone

OK Regulator

Trial period

(30d)

COD

RPI CAOs

Revenue Payment Stream from the Goverment

Semi annual of payments (For X years, normally 15 years)

Source: SMBC



7

Financing alternatives for RPI-CAO framework :

Noteholders

Notes Issuer

RPICAOs

Concessionaire Peruvian Trust Goverment of Peru

Ministry in charge of Project Customers

3 7

24

6

8

51

Bond Issuance Project Finance

Source: SMBC



8

Solid economic growth and conservative level of government debt & foreign reserves.

Source: IMF World Economic Outlook Database, International

Financial Statistics, Central Reserve Bank of Peru(Graph and Calculation by SMBC)


PPP Project Awards through Time

9

Awarded PPPs have been increasing on a long term basis.

PPPs awarded by ProInversion (2006 -2015)

Source: ProInversion (“Peruvian economic oultlook and investment opportunities”, 7 Sep 2015)

(Investment amounts in USD million, VAT included)

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015


PPP Process

10Source: ProInversion (“Investment Opportunities in Public infrastructure and Public Service”, 22 April 2015)

Peruvian PPP has 2 proposal scheme: by Public and by Private.

Direct Award might be implemented in unsolicited proposal projects.

独立採算型コファイナンス独立採算型コファイナンス

落札決定

随意契約

民間主導プロジェクト

政府主導プロジェクト

落札決定

Copyright © 2016 Sumitomo Mitsui Banking Corporation. All Rights Reserved. 11

Peruvian Financial Market

Peru was ranked 7th in the Americas in 2015 in total amount of Project Finance

loans issued (at USD 1.5bn with 7 deals closed in 2015).

Source: Project Finance International (“League Tables” 2005 – 2015)

215

602

0

800

379

615759

1,083

1,741

3,531

1,501

0

2

4

6

8

10

12

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

No.

of

Deals

US

D M

M

Project Finance Deals in Peru (2005 - 2015)

Amount of Loans Closed No. of Deals Closed


Infrastructure Business Opportunities

12

Strong pipeline of infrastructure projects to be awarded in the next 5 years.

According to Governmental plan, infrastructure projects to be awarded will be over

USD 48 Bn.

Source: President Kusczinky Government Plan.

Ministry of Economics and ProInversion 2016

Projects with certificates and hence unconditional and irrevocable rights of

payments from the Government to be financed, already announced sum up over

USD 27 Bn.

Payments from the Government for Investment, Operation and Maintenance

(“O&M”) on strategic projects and with projects that hold certificates will continue to

be bid considering US dollar payments.Sub Sector of Projects

Public

Finance

($mm)

Public

Finance

(%)

PPP

($mm)PPP (%) Total ($mm)

Airport 2,000 6% 2,000

Port 1,000 3% 1,000

Railway 8,500 27% 8,500

Road 850 2% 3,800 12% 4,650

Social 22,000 46% 22,000

Water and Sanitation 10,000 21% 10,000

Infrastructure Total 32,850 69% 15,300 49% 48,150

Mining 1,000 3% 1,000

Hidro power generation 15,000 48% 15,000

Gas pipeline and plants 15,000 31% 15,000

Total 47,850 100% 31,300 100% 79,150

MEF - Public Budget for

2016 ($mm)41,340

Public budget has nominally grew in 11% per

year on average the last 10y


Infrastructure Business Opportunities – continued

13

Projects with Certificates from the Government (GBS-quasi sovereign risk):

Source: ProInversion, Ministry of Justice, Ministry of Transportation and Communication, SEDAPAL

N. Sector Sub Sector Name of Project

Payments

from Gov.

(USD vs

PEN)

($mm)Awarding

Date

1 Longitudinal de la Sierra Tramo 4 USD 444 4Q 2016

2 Longitudinal de la Sierra Tramo 5 USD 500 TBD

3 Peripheral ring road in Lima USD 2,000 TBD

4 Lima Metro Line 3 USD 5,623 IIQ 2017

5 Lima Metro Line 4 USD 5,000 IVQ 2017

6 Tren Huancayo Huacavelica USD 240 4Q 2016

7 Tren de Cercania (Huacho-Lima-Ica) USD 1,500 TBD

8 Lima Metro Line 1 expansion USD 300 Awarded

9 Tren de la Costa USD 9,322 Under

revision

10 Relocation of prisons (major

penitenciary facilities)USD 760

IV 2017 -

IQ 2018

11 New penitentiary facilities USD 551 IV 2017 -

IQ 2018

12 Improvement and rehabilitation of

existing prisonsUSD 30

IV 2017 -

IQ 2018

13 Irrigation:

$550mmMajes Sihuas II USD 550 Awarded

14 Clean Water:

$600mmObras de Cabecera Lima - Drinking

water LimaPEN & USD 600 4Q 2016

27,420

Water

Expected investment for infrastructure projects with certificates for milestone

completion ($mm)

T

r

a

n

s

p

o

r

t

a

t

i

o

n

Roads:

$2,944mm

Metro

subway:

10,623mm

Rail:

$11,362mm

S

o

c

i

a

l

Prisons:

$1,341mm


SMBC’s Presence in the Americas

14

In the Americas, SMBC has closed over 53

Project Finance transactions for a total of

US$3.9 Billion for the year ending on

December 31, 2015.

Growing regional footprint (4 new offices in

past 4 years) and strong knowledge of

emerging markets. SMBC has presence in

LatAm’s most dynamic markets.

Resources also dedicated to very early stage

advisory work for Sponsors as financial

advisor.


SMBC – A Globally Recognized Leader in Project Finance

15

Notable achievements in project finance globally:

2015

2014

Best Infrastructure Bank of the Year (Latin Finance Magazine)

Global Project Finance Bank of the Year (Thomson Reuters)

Americas Project Finance Bank of the Year (Euromoney)

2013 Top 3 Global Project Finance Loans (Dealogic)

Top 4 Global MLA (Thomson Reuters)

2012 Global Project Finance Bank of the Year (Thomson Reuters)

Global ECA Coordinator for Oil & Gas (Thomson Reuters)

Global Infrastructure Bank of the Year (Infrastructure Investor)

Top 3 Global MLA (Thomson Reuter)

Top 5 Global MLA (Dealogic)

2011 Global MLA of the Year (Euromoney)

2009 Global Arranger of the Year (Euromoney)

2008 Global Project Finance Bank of the Year (Thomson Reuters)

Recent Latin American Deals

Our awards in the Americas in 2015

- Best Infrastructure Project Finance Bank of the Year (Latin Finance Magazine)

League Table #2 in the Americas as MLA

Top 5 Bookrunner in Latin America for 2015

Deals

of the Year

Latin America

Trafigura as Syndicated Loan of the Year (LatinFinance)

San Juan Wind Farm as Deal of the Year (Trade Finance

Americas)

Beta Lula Central as Deal of the Year (Trade Finance Americas)

Sapura Seadrill as Deal of the Year (Trade Finance Americas)

North America

Freeport LNG Train 3 as Deal of the Year (Trade Finance

Americas)

South Fraser Perimeter as N.A. Refi Deal of the Year (IJGlobal)

Corpus Christi as L.A. LNG Deal of the Year (IJGlobal)

Ongoing

Confidential

Financial Advisor

September 2015

US$350,000,000Senior Secured

Asset-Backed Facility

Trafigura Beheer B.V.

Joint Mandated Lead Arranger & Bookrunner

October 2014

US$280,000,000Senior Secured Facility

Terminal Internacional del Sur S.A.

Financial Advisor & Mandated Lead Arranger

October 2015

US$3,000,000,000Revolving Credit Facility

Grupo Aeroportuario de la Ciudad de Mexico

Lead Manager

January 2016

US$200,000,000Term Loan

Longitudinal de la Sierra -Tramo 2

Mandated Lead Arranger

Ongoing

US$250,000,000Senior Term Loan

Conexion Norte

Structuring Bank, Sole Bookrunner, Mandated Lead Arranger, Hedge Coordinator

Ongoing

Energy Infrastructure

Confidential

Financial Advisor, Joint Bookrunner

November 2016

US$256,000,000Term Loan

MPG La Bufa

Structuring Bank,Bookrunner, Mandated Lead Arranger, Hedge Coordinator, Admin

Agent Deal of

the Year Deal of

the Year Deal of

the Year

US$4,125 MillionTerm Loan Facility

Infrastructure Project (Energy)

Infrastructure Project (Toll Road)

Source: PFI, IJGlobal

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwjnkf-s7e3KAhWIGz4KHUR7AWIQjRwIBw&url=http://www.pfie.com/home/pfi-awards/&psig=AFQjCNFM--MI4ZbiGhYK8vFPvCQXn7ub-w&ust=1455216304532223

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwjnkf-s7e3KAhWIGz4KHUR7AWIQjRwIBw&url=http://www.pfie.com/home/pfi-awards/&psig=AFQjCNFM--MI4ZbiGhYK8vFPvCQXn7ub-w&ust=1455216304532223


SMBC’s Presence in Peru

16

Office opened in 2012.

Project Finance:

Leading bank in the region. On the ground relationship with most active

infrastructure players (foreign and local).

Local team with experience financing PPP through RPI-CAO.

Peruvian Corporate:

Providing Corporate, Trade, Structured and Supply Chain Finance to top tier

entities in various important sectors.

Japanese Corporate:

SMBC provided its 1st offshore loan to a Japanese corporate (Jan. 2008) in Peru

and continues supporting Japanese corporates in various areas.


SMBC’s Presence in Peru – continued

17

SMBC has relevant

experience leading

landmark transactions

in addition to an

important footprint and

local presence in Peru.

December 2014

US$311 MillionSenior Secured Facility

Puerto Bravo


October 2014

US$280 MillionSenior Secured Facility

Terminal Internacional del Sur S.A.

Financial Advisor & Mandated Lead Arranger

January 2016

US$200 MillionTerm Loan

Longitudinal de la Sierra -Tramo 2


August 2014

US$800 MilionBridge Loan Facility

Gasoducto SurPeruano S.A


July 2013

US$724 MillionSenior Term Loan Facility

BNDES Direct Loans, IDB-A Loan

Empresa deGeneracion Huallaga


June 2014

US$500 MillionSenior Unsecured Term Loan

Facility

Petroleos del Peru S.A.


March 2014

Peru

US$1,500 MillionSenior Unsecured

Credit Facility

Sociedad Minera Cerro Verde S.A.A.


December 2015

Peru

US$366 MillionSenior Secured Term Loan

Joint Bookrunner

In Market

US$4,125 MillionTerm Loan Facility

Confidential

Financial Advisor & Bookrunner

In Market

Infrastructure Project (CAO backed financing)

US$640 MillionCredit Facility

Confidential


In Market

Infrastructure Project (CAO backed financing)

US$350 MillionRevolving Credit Facility

Confidential


January 2014

US$125 MillionBridge Loan

Facility

Inkia Holdings Ltd.


August 2012

US$595 MillionSACE Guaranteed Term Loan Commercial Bank TL Facility

Mandated Lead ArrangerBookrunner, SACE Agent,

Admin Agent

July 2014

US$100 MillionSenior Unsecured Term Loan

Mandated Lead ArrangerDeal of

the Year

Deal ofthe Year

Deal ofthe Year

Infrastructure Project (Energy)

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&ved=0CAMQjRw&url=http://www.worldatlas.com/webimage/flags/countrys/samerica/peru.htm&ei=HHY-VZiuCavfsAT6uYDYCQ&bvm=bv.91665533,d.cWc&psig=AFQjCNG7HPG7XhublwxdKiRyBRsbBNbHAw&ust=1430243228215035












peruvian infrastructure business opportunities from a financial … · 2016-09-12 · peruvian...

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