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Infrastructure Developer Bond Guarantee (Peru). Partial Credit Guarantee, Back-stop facility supporting principal recovery Juan Mario Laserna J. Graña & Montero Business Description.
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Infrastructure Developer Bond Guarantee (Peru) Partial Credit Guarantee, Back-stop facility supporting principal recovery Juan Mario Laserna J.
Graña & Montero Business Description • Graña Montero is the largest engineering services group in Peru with around US$200 million of total assets and US$180 million in revenues, mainly dedicated to the business of engineering and construction services. 70 years of history and excellent work completion track record. • It also provides petroleum services (fuel terminals, drilling, extraction), information systems, engineering and real estate developing services. Strategic investments in concessions and public service companies. It is the operator of the first toll road concession in Peru (Arequipa). • BBB (triple B) national scale rating as a corporate by Fitch and Equilibrium, local rating agencies. • Short term banking debt with high a refinancing risk and very high interest rates.
Term Sheet Summary • Bond Profile • Amount: US$50,000,000 • Term: 8 years • Grace period: 6 months • Amortization: Semi-annual principal and interest payment • Type of payment: Equal coupons (principal + interest), mortgage style • Coupon amount: US$4.3 million (with 8.5% interest rate) • Final payment: October 2011 • Shadow rating A and Final rating AA+ • Guarantee Structure • Amount: Up to US$20 million by IDB and FMO • Coverage: Callable for the full amount as a back-stop facility for reduction of principal under consecutive events of default
Bond Structure - Trust Structure • Assigned Cashflows • Level 1: Segregated assets from non-construction subsidiaries: • GMI S.A. - Information technology, platform service • GMD S.A. – Engineering service • GMT. – Toll road concession • GMP S.A. – Petroleum and fuel terminal operation • Level 2: Sales from GyM S.A. • Pre-funded Debt Service Reserve Account: • Equal to 2 coupons (one year debt service)
Bond Structure – Securitization Trust Excess cash after structure waterfall Flows back to IDeveloper Group Excess cash after structure waterfall Flows back to IDeveloper Group
Bond Structure – Internal Credit Enhancements • Corporate Guarantee by the Graña Montero Group • Pre-funded and replenishable Debt Service Reserve Account • Immediate funding of the Debt Payment Account • Pre-funded debt service reserve account • Pre-funded from the bond proceeds for an amount equivalent to two installments of principal and interest • Step-in rights through trust ownership of shares • The shares of GMT, GMP, GMI and GMD (Originators of the Segregable Assets – Level 1) are transferred to the securitization trust.
Partial Credit Guarantee - Triggers • The Gurantee will be triggered only after a set of events and actions occur: • Waterfall : the cashflow assigned to the trust are insufficient to cover the debt service due in the DPA. • Corporate Guarantee: The Trustee will request for the corporate guarantee to cover the shortfall in advance of the payment date, and the corporate guarantee does not deliver the required amount; • Provision Account and Acceleration Account : The Trustee has utilized all amounts available in PA and AA but it is still insufficient to cover the payment; • DSRA: The balance of the DSRA is insufficient to cover the required amount • Corporate Guarantee does not replenish the DSRA within the deadline
Inter-American Development BankPrivate Sector DepartmentCapital Markets Unit
