Clifford Chance

Clifford Chance completes another major infrastructure financing in Peru

Clifford Chance advised Mizuho Bank, Ltd. as administrative agent and lender, Mizuho Securities USA LLC as lead arranger, and Sumitomo Mitsui Banking Corporation as lead arranger and lender in connection with the US$396 million financing for the expansion of the Line 1 subway in Lima, Peru.

The structure for the Line 1 Expansion Project (“Line 1”) involves the securitization of irrevocable and unconditional payment obligations of the Government of Peru ("CPAOs"), which vest under the concession agreement as milestones are achieved during the construction of the project and are then sold by the concessionaire to the borrower under a long-term loan facility.

Line 1 includes the improvement of civil works and the purchase of additional rolling stock, including trains and cars that will be designed, built, operated and maintained by the concessionaire GyM Ferrovías S.A., owned by Graña y Montero S.A.A. and Ferrovías as Participaciones S.A. The financing is structured as a long-term loan facility and a working capital facility.

While certificate-backed financings have been used before in Peru, the concession agreement for Line 1 is unique and especially complex inasmuch as the value of the CPAOs can change depending on when investments are finalized. The deal involves several jurisdictions, namely the states of New York and Delaware and the nations of the Cayman Islands, Peru and The Netherlands.

Clifford Chance previously advised on the financing of Line 2 of the Lima and Callao Metro project in Peru, which was the largest international financing of a Peruvian infrastructure project.

Banking & Finance partner Gianluca Bacchiocchi led a Clifford Chance team that included partner Charles Adams and associates from three of the Firm's offices: Jeffrey Susskind in São Paulo; Silvia Menendez, Tyler Grant, Nicholas Loukides and Shane Meckler in New York; and Nolan Groenland, Robin Houtveen, Mark Jan Arends, Leen Kranenburg and Michiel Sunderman in Amsterdam.

Clifford Chance has been recognized for decades as a preeminent law firm in Latin America. The Firm has led the way in developing successful, novel financing structures for a diverse client base, and is constantly innovating its service offering, such as with a dedicated Latin America Capital Markets group specialized in sovereign, corporate and project bonds with both issuers and underwriters.