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Financiamiento Privado de Infraestructura, Mercado de CapitalesFinanciamiento Privado de Infraestructura, Mercado de Capitales yyGarantGarantíías Financierasas Financieras

Ellis J. Juan

Banco Inter-Americano de Desarrollo (BID)

19 y 20 de febrero de 2009

México, Distrito Federal.

PRIMER ENCUENTRO TPRIMER ENCUENTRO TÉÉCNICOCNICOSOBRE LA ESTRUCTURACISOBRE LA ESTRUCTURACIÓÓN DE PROYECTOS DE ASOCIACIN DE PROYECTOS DE ASOCIACIÓÓNN

PPÚÚBLICOBLICO--PRIVADAPRIVADA

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Esquema general de la presentaciEsquema general de la presentacióónn

I. BID : Rating Crediticio y Status de Acreedor PreferenteII. Bancabilidad de Proyectos: Volatilidad de Cash FlowsIII. Analisis de Riesgos (desde el punto de vista de la

Mobilizacion de Capital Privado -- Comite de Creditode Bancos)

IV. Mitigacion de Riesgos (opciones de mitigacion deriesgos disponibles)

V. BID: Apoyo a estructuras APPsVI. BID: Garantias y DerivadosVII. BID: Casos

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BID:BID: CreditCredit RatingRating y Acreedor Preferentey Acreedor Preferente

� Global Credit Rating AAA : Fitch, Moody’s & Standard Poors

� Los Estados Unidos Mexicanos (EUM) han sido miembros accionistas delBID desde su creación en 1959. En toda la historia del BID, los EUMsiempre han pagado sus obligaciones al BID y nunca han estado endefault con el BID inclusivo durante las varias crisis que ha atravesado elPaís.

� Hasta hoy el BID ha financiado 10 proyectos del sector privado enMéxico de los cuales tres están repagados, cuatro en fase de reembolsoy tres en proceso de desembolso o otorgamiento (garantía). Solo unode esos proyectos (Energia, IPP) entró en default por un periodo de seismeses.. La situación se resolvió y el proyecto empezó a generar nivelesde ingresos suficientes para pagar su deuda con el BID y finalmente fuecomprado por una compañía quien prepagó la deuda con el BID.

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PC (project completion)

InvestmentInvestment

DebtDebt

EquityEquity

Basic StructureBasic Structure ::

Capital Markets:Capital Markets: LongLong--Term FinancingTerm Financing

Cash FlowsCash Flows

US$US$

YearsYears

� Repayment of Debt is based on project cash-flows (non-recourse to sponsors)� Relatively high initial investments� Need for longer debt tenors to justify IRR tosponsors

� Repayment of Debt is based on project cash-flows (non-recourse to sponsors)� Relatively high initial investments� Need for longer debt tenors to justify IRR tosponsors

BancabilidadBancabilidad de Proyectos : Volatilidad Cashde Proyectos : Volatilidad Cash FlowsFlows

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PC (project completion)

Investment

Debt

Equity

Basic StructureBasic Structure ::

Capital Markets:Capital Markets: LongLong--Term FinancingTerm Financing

Cash Flows (e)Cash Flows (e)

US$US$

YearsYears

Cash Flows realCash Flows real

Risk Mitigation products : Minimize cash flows downwardRisk Mitigation products : Minimize cash flows downwardfluctuations (ability to repay principal + interest)fluctuations (ability to repay principal + interest)

Key driver: Cash Flow predictability

BancabilidadBancabilidad de Proyectos : Volatilidad Cashde Proyectos : Volatilidad Cash FlowsFlows

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AnAnáálisis de Riesgos: Identificacilisis de Riesgos: Identificacióónn

Riesgos Relacionados al ProyectoRiesgos Relacionados al Proyecto(relativamente manejables por inversores y(relativamente manejables por inversores y

prestamistas)prestamistas)

• Construcción y Puesta en Marcha (costode ingeniería y construcción / plazo deconstrucción)

• Riesgo Operacional(know how técnico y operativo)

• Riesgo de Crédito(project leverage)

• Riesgo Ambiental(pasivos pasados y futuros, retrasos,sobrecostos)

Riesgos No Relacionados al ProyectoRiesgos No Relacionados al Proyecto(no manejables por inversores y(no manejables por inversores y

prestamistas)prestamistas)

• Riesgo Politico(expropiación, violencia política,convertibilidad y transferencia demoneda)

• Riesgo Regulatorio(default de obligaciones contractualesdel Gobierno; ej., fórmulas de ajuste,derechos de vías)

• Marco Macroeconómico(cambios en el balance macro en cortoplazo; ej., tipo de cambio, inflación, etc.)

• Marco Legal(regla legal, ej., sistema judicial,procedimientos regulatorios y arbitraje)

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AnAnáálisis de Riesgos: Estructuralisis de Riesgos: Estructura

OperadorPlanta Tratamiento

Agua

OperadorPlanta Tratamiento

Agua

AccionistasAccionistas

Prestamistas/Tenedores BonosPrestamistas/

Tenedores Bonos

OperadorOperador

EmpresaConstructoraEmpresa

Constructora

AutoridadConcedenteAutoridad

Concedente

Off TakeContract

Off TakeContract

Acuerdo deAccionistas

Contrato deConcesión

Contrato de Comprade Servicios

Usuariosfinales

Contrato deConstrucción

Contrato Operación yMantenimiento

Riesgos RegulatoriosRiesgos Regulatorios

Riesgos de Pago por ServicioRiesgos de Pago por Servicio

Riesgos deRiesgos deConstrucciConstruccióónn

RiesgosRiesgosOperacionalesOperacionales

Riesgos de MonedaRiesgos de Monedaextranjera yextranjera yrefinanciamientorefinanciamiento

Riesgos PolRiesgos Polííticos y Macroeconticos y Macroeconóómicosmicos

Suministro deAgua

Suministro deAgua

Riesgos RegulatoriosRiesgos Regulatoriosyy ClimaticoClimatico

TunelTunel EmisorEmisor OrienteOriente,, ObraObraPublicaPublica ((ConaguaConagua))

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EvaluaciEvaluacióón y Mitigacin y Mitigacióón de Riesgosn de Riesgos

Privado/Publico

PublicoPrivado/ PublicoPrivado/Publico

Privado/Publico

PrivadoPrivado

Financiamiento enmoneda LocalDerivadosDeuda en tasa fija

Contrato deconcesiónGarantías Parcialesde Riesgo.Garantias parcialesde credito (AAA)>Derivados

Seguro de RiesgoPolítico

Garantía deIngresos /VPN ConcessionGarantías Parcialesde Riesgo

EvaluaciónAmbiental

Contrato deOperación

EPC Contract andperformance bonds

Bajo (MEX)AltoBajo (MEX)AltoMedioBajoMedio

Generación deIngresos.Devaluacióninflación, capacidadde pago usuario

Pago de Aguatratada.3 entidadesresponsables delpago de tarifa. Noexiste presupuestomulti anual.

Expropiacióntransferenciaconvertibilidad ycese en lageneración deingresos

Generación deIngresos

Pasivos OcultosGeneración deingresos yaumento de costosde operación

Sobrecostos yRetrasos

RiesgoMacroeconómico

RiesgoRegulatorio(Caso PlantaTrataminento

Agua)

Riesgo PolíticoRiesgo deDemanda

RiesgoMedio ambiental

RiesgoOperación

RiesgoConstrucciónRiesgos

Efecto enFlujo de Caja

Impacto

Instrumento deMitigación

Asignación(allocation)

SoberanosNoSoberanos

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BID :BID : SoporteSoporte FinancieroFinanciero parapara EstructuraEstructura APPsAPPs

ComponenteSector PublicoComponenteComponente

SectorSector PublicoPublicoComponente

Sector PrivadoComponenteComponente

SectorSector PrivadoPrivadoPrivate Financial Markets

(Financing PPPs)Private Financial MarketsPrivate Financial Markets

(Financing(Financing PPPsPPPs))

Ventana SoberenaPrestamos

Ventana SoberenaPrestamos

PPP ProjectPPP Project

Ventana SoberenaGarantias

Ventana SoberenaGarantias

Ventana Sub-NacionalPretamos y Garantias

Ventana Sub-NacionalPretamos y Garantias

Ventana PrivadaGarantias

Ventana PrivadaGarantias

Ventana PrivadaPrestamos

Ventana PrivadaPrestamos

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� Ventana Soberana� Prestamos� Garantias

� Ventana Sub-Nacional (Estados y Municipios)� Prestamos� Garantias� Subordinada

� Ventana Privada� Prestamos� Garantias� Subordinada

BID :BID : SoporteSoporte FinancieroFinanciero parapara EstructuraEstructura APPsAPPs

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BID:BID: GarantiasGarantias yy DerivadosDerivados

� Mezzanine Guarantee� Pool Guarantee� Rolling Guarantee� Maturity Guarantee

� Co-Wrap Guarantee with Co-insurance

AplicacionesAplicaciones::

Design the “optimal” partial credit enhancement for a given project in order toimprove its credit risk profile enough to capture private capital on adequate

terms & conditions

Design theDesign the ““optimaloptimal”” partial credit enhancement for a given project in order topartial credit enhancement for a given project in order toimprove its credit risk profile enough to capture private capitaimprove its credit risk profile enough to capture private capital on adequatel on adequate

terms & conditionsterms & conditions

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BID:BID: GarantiasGarantias yy DerivadosDerivados

� Mezzanine Guarantee

� A “credit” loss protection enhancement with IDBproviding a guarantee for a specified mezzanine layerof credit risk, thereby elevating the overall transactionto investment grade on the local currency scale. It isanticipated that subsequent to the provision of themezzanine guarantee by the IDB, the issuer could seek,if warranted, a full wrap guarantee on the transactionfrom a private financial guarantor.

�� IllustrationIllustration: For a project bond, the IDB couldprovide a partial guarantee for an external liquidityreserve, which would pay out after thetransaction’s internal credit enhancement (such ascash reserves or sponsor recourse) has beenexhausted, but prior to the local investor’s capitalbeing at risk for the remaining exposure.

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Project Revenues(High Credit RiskQuality Layers)

Project Revenues(High Credit RiskQuality Layers)

Layer of LowerCredit Risk QualityLayer of Lower

Credit Risk Quality

Transaction Reserves

� Over-collateralization

� Project Debt ServiceReserve Acount

� Liquidity Reserve(sponsors recourse)

PartialPartialGuaranteeGuarantee

(a portion ofthe credit losson thetransaction, --debt service)

Transaction (ReceivablesSecuritization )

Mitigation of the lower credit riskquality and improving thetransaction rating attractsparticipation of MonolineMonolineInsurers to provide aInsurers to provide a ““wrapwrap”” onthe whole transaction,improving further thetransaction credit rating.

BID:BID: GarantiasGarantias yy DerivadosDerivados

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� Pool Guarantee for Asset-Backed orMortgage-Backed Bonds

– A partial credit enhancement product with IDB providing a guaranteefor a portion of principal and interest sufficient to offset potential lossesresulting from non-performing assets within the underlying collateralpool. The Pool Guarantee’s amount will be calibrated for eachtransaction to improve the project’s credit rating in a manner sufficientto attract targeted local investors.

•• IllustrationIllustration: A bank with a mortgage portfolio may pledgemortgage receivables as collateral to repay a bond issue.Although the mortgage collateral enhances the bond’s creditquality, the information on the collateral in emerging markets maynot be adequate (e.g. incomplete records of past performance)and as such, the collateral may not be sufficient to attract localinvestors to purchase the bond. The IDB could further enhance thebond with a partial credit guarantee in order for the bond toachieve a credit quality sufficient to interest targeted localinvestors.

BID:BID: GarantiasGarantias yy DerivadosDerivados

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Pool Guarantee: CBOPool Guarantee: CBO,, Illustrative purposesIllustrative purposes

Source: Rating Agencies Methodology (Case Example)

1. Stressed Default Rates (%)

CollateralRating BBB A AA

AAA 0.50 1.00 1.50AA 1.00 1.50 2.00A 2.00 3.00 4.50BBB 6.00 11.00 13.00BB+ 22.00 30.00 40.00 Approximation to Required Credit EnhancementBB 24.00 32.00 42.00BB- 30.00 36.00 48.00

Desired Rating (CBO) A

Underlying Credit Quality of Pool (AVERAGE) BB+Stressed Default Rate for a A rating 30.00%Recovery Rate (AVERAGE) 25.00%Loss severity (1-recovery rate) 75.00%

2. Assets Recovery Assumptions Expected Loss 22.50%(Default Rate * Loss Severity)

EM Sovereign without guarantee 25%EM Sovereign with guarantee 40%(principal + 12 month interest)EM Corporate 20%

Minimum Amount of Credit Enhancement = 22.50%(for bond holders guaranteed payment ofinterest + principal)

Desired CBO Rating

(illustration purposes)

CBO (Collateralized Bond Obligations) for Emerging Markets (EM) Debt

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• Rolling Guarantee

� A partial credit enhancement product with IDBproviding a guarantee of a specified number ofinterest and/or principal payments, on a rolling forwardbasis – i.e. the guarantee rolls forward to the nextinstallment date upon payment by the issuer of thecurrent installment -- so that the IDB guarantee coversa rising share of remaining debt service.

�� IllustrationIllustration: For a project or corporate bond issue whereinvestors perceive a potential risk associated with avariation in the debt service coverage at some pointwithin the overall bond tenor, or are uneasy about aperiod of heavy corporate expenditures, the IDB couldprovide a rolling guarantee to smooth out therepayment profile and allay investor concerns aboutpotential timing/cash flow issues.

BID:BID: GarantiasGarantias yy DerivadosDerivados

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Rolling &Rolling & ReinstatableReinstatable GuaranteeGuarantee((CarreterasCarreteras))

Debt /Service

CoverageRatio

1.51.5

1.01.0

Outstanding Principal

Years

N N + I

Rolling Guarantee

DSCRDSCR

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Rolling &Rolling & ReinstatableReinstatable GuaranteeGuarantee((CarreterasCarreteras))

Debt /Service

CoverageRatio

1.51.5

1.01.0

Outstanding Principal

Years

N N + I

DSCRDSCR

Liquidity Facility Guarantee

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BID:BID: GarantiasGarantias yy DerivadosDerivados

� Maturity Guarantee

– A partial credit enhancement product with IDB offeringa put option to investors to refinance an issue atmaturity with the IDB -for the purpose of persuadinginvestors to accept longer maturities.

•• IllustrationIllustration: In certain emerging markets the interestrate environments are such that even for privateissuers with very strong credit quality, tenors longerthan three years, for example, are just notavailable. In these markets, the IDB could offerissuers a maturity guarantee, to attract localinvestors with an appetite for 3-year paper intolonger maturities, by providing them an exit ifdesired.

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CapitalRepayment

Bullet %

Outstanding Principal

Years

N N + I

Maturity Guarantee

Bullet %

MaturityMaturity GuaranteeGuarantee::Riesgo de RefinanciamientoRiesgo de Refinanciamiento

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CasoCaso : Chile, Santiago: Chile, Santiago--ValparaValparaíísoso((GarantiaGarantia concon MonolinerMonoliner))

• Concession awarded to a consortium led by ACS and SACYR Group(Spain) in 1998 in Santiago de Chile, Chile.

• The toll-road concession consists in the expansion and refurbishing of 110km linking Santiago-Valparaíso and Viña del Mar

• Investment program of US$ 450 million to be partly financed through a localcurrency bond issue for the equivalent of US$ 300 million.

• IDB provided a credit guarantee to enhance the bond´s rating to a levelacceptable to local institutional investors. The IDB is Guarantor of Recordfor up to US$75 million with the remaining amount provided by privateinsurers. FSA (USA based private insurer) acted as co-guarantor of thetransaction.

• The issue before the IDB/FSA credit enhancement has been rated Baa2 byMoody’s, which is the highest investment grade rating ever given to a tollroad project in Chile. This is also the largest infrastructure bond soldprimarily to Chilean pension funds and insurance companies, paying acoupon of 6.02 percent (Unidad de Fomento), with a maturity of 23 years.

• The issue was rated AAA by local rating agencies after the IDB/FSAenhancement. It was successfully placed in April 9, 2002

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Case :Case : GranaGrana & Montero, Asset Backed& Montero, Asset BackedSecuritySecurity

� G&M Developer Group is the largest engineering services group inPeru with around US$200 million of total assets and US$180 million inrevenues. t is mainly dedicated to the business of engineering andconstruction services.

� It also provides petroleum services (fuel terminals, drilling,extraction), information systems, engineering and real estatedeveloping services. 70 years of history and excellent workcompletion track record.

� BBB (triple B) national scale rating as a corporate by Fitch andEquilibraim, local rating agencies

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• 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 -AA/AA

• Guarantee Structure� Amount: Up to US$20 million by IDB and FMO� Coverage: Callable for the full amount as a back-stop

facility or reduction of principalunder consecutive events ofdefault

Grana & Montero : Asset Backed Security

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Guadalajara Toll Road PCG (FARAC I)Guadalajara Toll Road PCG (FARAC I)

“RCO”(Consortium of Goldman Sachs & ICA)

Borrower

IDB PCGUS$400m (equiv)

Local currency Loanequivalent toUS$3.7billion

provided by BankSyndicate including

international &domestic lenders

Conveyance of TollCollections

Funding received fromSyndicated Loan

Legend:

Trust CollectingToll Revenues

Traffic Revenues

Backstops RCO forUS$400m principalrepayment

Lays off project risk for 6int’l banks pro-rata(PCG beneficiaries)

IDB PCG Exposure &Beneficiaries

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Banco Interamericano de Desarrollo

Representación en México: 9138-6200

www.iadb.org