Panama Seeks $2.3
Billion Canal Funding
The Panama Canal
Authority is looking to
put debt finance in
place for $2.3 billion
by the end of the year,
a figure at the upper
end of its borrowing
forecast, according to
ACP administrator
Alberto Aleman.
Under its expansion plan
proposal the ACP had
said it would need to
borrow between $1.5
billion and $2.3
billion to cover the
shortfall between
revenues and capital
expenditure between 2009
and 2011.
“We are looking at about
$2.3 billion in
financing for this
project,” Mr Aleman told
a Latin American
Investors’ conference.
“We are negotiating at
this time with the banks
to achieve the best
package possible for the
authority.”
The total cost of the
expansion project is
$5.25 billion, with most
of the project being
covered by internal
resources.
Toll increases lifted
annual revenues last
year to $1.76
billion and planned
incremental adjustments
of around 10% a year are
expected to lift that
figure to $2
billion this year.
But the difficulties
being felt in the US,
which accounts for 65%
of Canal traffic, is
beginning to show signs
of affecting volumes
passing through the
waterway.
Total volumes fell by 2%
to 79 m Panama Canal
Universal Measurement
System tonnes in the
first quarter of fiscal
year 2008 (October to
the end of December),
compared to 80.6m PC/UMS
tonnes in the same
period last year.
Mr Aleman, however, said
he was confident that
the crisis in financial
markets would not have a
major impact on Panama’s
ability to borrow the
funds required to
complete the project.
“The canal (has) very
good credit, now there
is a flight to quality
projects and the canal
is one of those
projects,” he said.
Multilateral development
banks have already
committed themselves to
the project, months
ahead of the deadline to
have a decision in
place.
The Inter-American
Development Bank has
said it will take almost
20% of the debt,
offering $400m for the
project. More than 40
private investment banks
have also expressed
their interest in
participating.
Japanese investment bank
Mizuho has been
appointed alongside
Shearman & Sterling to
advise the ACP through
the process.
A final decision is
required by the third
quarter of 2008, ahead
of the project to build
the new set of locks,
the most expensive
aspect of the $5.25
billion.
On the upside there are
positive signs that the
Panamanian economy may
be on the verge of
securing an investment
grade rating, something
that would help reduce
the cost of the debt
package.
“Panama’s credit story
continues to develop in
a positive direction,
with growth exceeding 8%
for a second year in a
row, which has
contributed to the
convergence of per
capita income with that
of low investment grade
sovereigns,” said
Theresa Paiz Fredel,
senior director in
Fitch’s Latin American
Sovereign Ratings team.
Fitch Ratings has
affirmed Panama’s
long-term foreign
currency and local
currency issuer default
ratings at ‘BB+’ — close
to investment grade —
and has revised its
outlook to positive. |
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