Clifford Chance

Clifford Chance advises on the second financing of Peru's first subway project

Clifford Chance LLP acted as New York counsel to Metro de Lima Linea 2 S.A., as concessionaire, and a consortium formed by Iridium (ACS Group) and Vialia (FCC Group) of Spain; Salini Impregilo, Ansaldo STS and AnsaldoBreda of Italy; and Cosapi of Peru, as Sponsors, in the US$800 million off-balance sheet loan financing for the financing of Line 2 of the Lima and Callao Metro project in Peru backed by governmental payment rights called "RPI-CAOs". The deal closed on October 27, 2015 and constitutes the second financing of the Project's overall financing package, coming off the heels of the US$1.15 billion RPI-CAO-backed bond financing for the Project that the firm closed on June 17, 2015.

This financing was groundbreaking as it marks the first ever international financing of a Peruvian infrastructure project (such as those involving CRPAO and RPI-CAO payments) through an off-balance sheet structured loan financing that is collateralized by RPI-CAO payments. Until now, all Peruvian projects that benefited from government-backed payment rights, such as RPI-CAOs, and that were financed internationally have been structured either as securitizations of payment rights in the international capital markets or as secured term loans  to the project company.

This transaction is one of several financings being put into place to finance Peru's first underground metro system, and its total cost (US$5.3 billion) makes it one of the most ambitious infrastructure projects ever to be undertaken in Peru and Latin America. Clifford Chance is simultaneously advising the Concessionaire and the Consortium in the completion of the remaining financings for the Project.

This financing represents one of several recent projects undertaken by Clifford Chance in advising investors on Peru's innovative regime of government-backed payment rights to finance public infrastructure projects. Recent examples include the firm's representation of Banco Santander in the US$200 million financing of the Longitudinal de la Sierra – Tramo 2 project, Credit Suisse and Banco Espirito Santo de Investimento in the US$237 million RPI-backed bond offering for the Red Dorsal Nacional de Fibra Optica project (awarded Best Infrastructure Bond of 2015 by LatinFinance) and the US$1.15 billion RPI-CAO-backed bond financing for the Project, mentioned above.

The team was led by partner Gianluca Bacchiocchi associates Diego Harman and Jose Raul Jasso, with assistance from Jay Gavigan and Gareth Old (all based in New York).

Members of the firm's Latin American practice have extensive experience advising on capital markets transactions in Peru, Latin America and around the world, making them very familiar with the regulatory framework, legal practices and financings involving these long-term concessions or leases in Peru and Latin America. Team members have advised on many of the region’s most historic infrastructure transactions, including the IIRSA Toll Roads, Huascacocha and Taboada Water Projects, EsSalud Hospitals transaction and Lima Airport in Peru.