Clifford Chance

Clifford Chance advises on Rumichaca-Pasto 4G toll road project in Colombia

Largest infrastructure project-related social bond in Latin America

Leading international law firm Clifford Chance has advised Concesionaria Vial Unión del Sur S.A.S. (the Concessionaire), Sacyr Concesiones S.L., Sudamericana Integral de Construcciones Sudinco S.A., and certain of their affiliates in connection with the refinancing of the project finance debt incurred to finance the construction and development of the Rumichaca-Pasto 4G toll road in Colombia. The refinancing consists of the following tranches of debt issued and incurred by Patrimonio Autónomo Unión del Sur with the Concessionaire as co-obligor:

(i) COP1.03 trillion (~US$262 million) 6.660% Senior Secured Series 2022-1 UVR Indexed Social Notes due 2041 offered and sold pursuant to Rule 144A and Regulation S under the Securities Act of 1933,
(ii) US$276.5 million in dual tranche New York law-governed loans, and
(iii) COP1.02 trillion (~US$260 million) in Colombian law-governed loans.

The refinancing also included credit enhancements in the form of a US$28.4 million LC Facility and a first-of-its-kind COP3.14 billion (~US$78.9 million) Liquidity Facility to be used to backstop certain debt service and operation and maintenance reserve requirements.

The 83-kilometer Rumichaca-Pasto toll road is being developed as a Public Initiative 4G project as part of the Colombian Government’s 4G Program. The project will connect the township of Rumichaca at the Colombian border with Ecuador to the city of Pasto in southern Colombia. It aims to improve mobility and commerce throughout the southwest region of Colombia and bolster economic development and growth in rural regions by providing a key commercial route to larger markets and with Ecuador.

This transaction represents the largest infrastructure project-related social bond issuance in Latin America, and is expected to contribute to and promote the following UN Sustainable Development Goals:

• No Poverty (SDG1)
• Decent Work and Economic Growth (SDG8)
• Industry, Innovation and Infrastructure (SDG9)
• Reduced Inequalities (SDG1)

The notes and loans are also aligned with the basic components of the Social Bond Principles of the International Capital Market Association (ICMA).

Lead partner Fabricio Longhin commented, "Our team was able to use our extensive experience with Colombia's 4G program to incorporate a series of 'firsts' into our financing structure that reduced financing costs for our clients. This bespoke structure highlights our ability to work together across offices and practices and dip into our broad range of expertise to deliver innovative solutions."

Working with Longhin was lead deal associate Mariana Estévez, partner Hugo Triaca and law clerks Joyce Moore and Manuel Robledo in New York; associate Daniel Justus in Washington, DC and foreign law clerk Fernando Liu in São Paulo. Additional support was provided by:

• Tax: partner Avrohom Gelber and associate Allison Kelly (New York)
• ERISA: partner Paul Koppel and associate David Walsh (New York)
• Derivatives: partner David Felsenthal and associates David Martinez and Shea Cunningham (New York)
• '40 Act: partner Cliff Cone (New York)
• Global Financial Markets: partner José Guardo, abogado Antonio Sánchez-Cirujano and paralegal Elena Euba Hernández (Madrid)

Clifford Chance has wide-ranging experience advising on toll road transactions in Latin America, and is uniquely experienced in guiding clients through the various financing structures and regulatory frameworks involved in long-term concessions in Latin America. The firm has been at the forefront of the Colombian 4G program, having acted in more 4G project financings – including the Rio Magdalena 2, Pacifico Tres, Costera, Perimetral and Alto Magdalena toll road projects – than any other international law firm.