BBVA’s Peru programme

At the tail end of 2006 an export credit agency (ECA) deal involving Spanish bank BBVA was signed for Peru that, although small, is worthy of a ‘Best Deal of 2006″ award.

The €8.522mn deal involves the first time ever that a contract financing encompassing an official soft loan by the government of France has been awarded to a non-French bank. It is also the first official soft loan granted by the French government to South America since a loan to Chile in the early 1980s.

The deal sees the borrower, Peru’s Ministerio de Economia y Finanzas acting in the name and on behalf of the government of the Republic of Peru for the buyer, television broadcaster Instituto Nacional de Radio y Television del Peru (IRTP).

The purpose of this commercial contract is to reinforce and upgrade the technical capacities of the Peruvian public television system. The exporter of equipment is Thomson Broadcast Multimedia (France).

Of the full €8.522mn loan, 60% is financed under the French government’s Direction des Affaires Institutionelles of the Ministry of Finance, acting through French bank Natixis.

Natixis acts to stabilise the interest rate, on behalf of the French state, effectively subsidising BBVA’s eventual loss on the long-term fixed rate they gave the borrower.

The other 40% is financed under an ECA buyer’s credit covered by Coface, which includes the insurance premium costs.

BBVA’s Paris branch acted as sole arranger and lender for the transaction, while the bank’s Peruvian affiliate BBVA Banco Continental, through its trade finance department and institutional department, participated actively in the negotiation of the buyer’s credit agreement.

The tenor of the credit is 10 years (20 semi-annual instalments) and the expected period of construction is expected to take 18 months.

“Due to its long stance and important local presence in Peru through BBVA Banco Continental since 1995, BBVA has a very positive vision of Peruvian country risk,” says a spokesman at BBVA, “which is confirmed by Peruvian economy data.”

BBVA Banco Continental is a fully licensed bank in Peru, offering universal banking services such as retail, wholesale, treasury, investment, pension funds, insurance and trade finance.


Deal information:

Borrower: Ministerio De Economis Y Finanzas, Peru
Buyer: Instituto de Radio y Television Del Peru (IRTP)
Amount: €8.522mn
Mandated lead arranger: BBVA
ECA: Coface
Exporter: Thomson Broadcast & Media
Tenor: 10yr
Availabilty period: 18 months
Margin: Coface tranche – 0.75%
Date signed: December 2006