CAF-AM Administradora de Activos Uruguay S.A. successfully launched a fund to finance infrastructure projects in Uruguay

Two years after the creation of the first debt fund to finance infrastructure projects in Uruguay, which made a contribution of 2,800 million indexed units (equivalent to around US$350 million), CAF-AM Administradora de Activos Uruguay S.A. launched the debt fund financial trust for infrastructure in Uruguay II CAF-AM, called “Debt Fund II CAF-AM” for a total of 4 billion indexed units, equivalent to about US$500 million. As in the first fund, the purpose of Debt Fund II CAF-AM, is to channel funds from investors to finance infrastructure through senior long-term debt instruments.

The fund was launched through Bolsa Electrónica de Valores S.A. (BEVSA) and the Montevideo Stock Market (BVM), issued in two—one wholesale and other retail—tranches. The retail tranche allowed investors to purchase up to US$63,000 for investor and up to 5% of the total issue. Ten bids were submitted for a total of US$183,000. For the wholesale tranche, conceived particularly for pension funds, insurance companies and other institutional investors, total demand was US$530 million.

The funds will be disbursed gradually and as projects reach completion, with an interest rate to be paid on a case-by-case basis. In addition, CAF will co-finance the 10% of the amount of the debt, so the actual amount available to fund infrastructure will be US$550 million, which is divided into US$500 million in the issuance and US$50 million provided by CAF.

The manager of Debt Fund II CAF-AM will be CAF-AM Administradora de Activos - Uruguay, S.A, an Uruguayan company owned by CAF Asset Management Corp., a subsidiary of CAF-development bank of Latin America. Conafin Afisa (Corporación Nacional Financiera Administradora de Fondos de Inversión S.A.), which is the trust owned by the National Development Corporation, will be the trustee, while BEVSA will be the agent. The legal advisor is Guyer & Regules and the tax advisor is CPA FERRERE. The public offering is registered with the Central Bank of Uruguay and will be listed in BVM and BEVSA.

The Debt Fund II CAF-AM will offer loans or will acquire senior debt for infrastructure projects to be implemented by private public partnership (PPP) concessionaires or contractors. The total investment need for the five-year period (2015-2019) is over US$2.14 billion for projects on education, energy, railway, hospitals, ports, roads and housing.

CAF representative in Uruguay, Germán Ríos, expressed his satisfaction at the creation of the Debt Fund II CAF-AM and highlighted that “it is an optimal instrument to channel funds from investors to promote infrastructure projects, as it aligns long-term investments as required by institutional investors with long-term financing as required by infrastructure projects. We are proud to contribute to such an important proposal for national development, providing tools to create more jobs and to attract new investors with an infrastructure that best suits their needs.”

Additionally, Agustín Gattas, Manager of Market Operations at BEVSA, expressed his satisfaction for the large demand of US$530 million from institutional investors through BEVSA, and spoke of the role of the electronic stock exchange in channeling investments. “We are proud to offer a professional and transparent environment for investors and issuers, benefiting at the same time the nation and those who seek to gain access to and provide funds in the capital market. This is the largest private trust issuance in history and precedes what will certainly be a record year of issues of trusts and negotiable bonds for the Uruguayan stock market,” he said.

Loans will have to meet minimum requirements that ensure an appropriate risk profile. This should be compliant with a scheme of loan issuance, analysis, negotiation and monitoring subject to the best lending practices consistent with those of CAF, including technical, legal, environmental and social aspects. After loans are approved, CAF-AM Administradora de Activos Uruguay S.A. will monitor each project funded until their total repayment, to be sure that conditions laid down in the loan agreement are met. It will also participate in the dialogue prior to the launch of the PPP projects to ensure registration of contracts.