Making tracks in Chile
In September 2008, Santander and BNP Paribas closed a US$147mn export credit facility backed by the Spanish export credit agency Cesce.
The facility is part of a larger financial structure, signed in 2006, which featured three tranches. Santander Chile arranged one tranche in Chilean UFs; Santander and BNP Paribas arranged another tranche covered by guarantees from several ECAs; and one transaction was arranged by BNP Paribas in US dollars.
Banco Santander contributed US$73.5mn and BNP Paribas US$73.5mn to the Cesce facility, which carries a tenor of 10 years with a two-year grace period and semi-annual repayments.
The deal was signed despite the surrounding economic turmoil witnessed in September 2008. The successful conclusion of the deal was no doubt aided by the fact that Cesce cover brings a certain level of comfort to the lenders and the fact that Metro de Santiago is a long-standing client of the lending banks.
Commenting on the transaction, Jose Luis Vicent, executive director, trade, export and commodity finance at Santander says: “The Metro SA deal was arranged jointly by Santander and BNP Paribas as a multisource facility, a flexible structure under which the company could fulfil the financing of its Capex needs for a new line with sourcing from any part of the world.”
He adds: “The initial structure signed in 2006 also included facilities in local currency and US dollars to cover the local costs, which were disbursed by Santander Chile and BNP Paribas during 2007 and 2008. But only in 2008, right at the beginning of the financial crisis, Metro finally sorted out who its capital good suppliers would be, and requested support to face those needs.”
Apart from the supply from Spain, additional purchases from France and the UK have already been financed, with a view to adding additional contracts to be sourced from other European countries. The team effort between the two banks (both on a global and a local basis), the support of several ECAs and public authorities, and Metro’s understanding of the current market conditions helped to facilitate a swift closing of the initial contracts already financed, and paved the way for the new ones in the pipeline.
This deal consolidates Santander’s and BNP Paribas’ relations with the Chilean metro company. Both banks previously arranged the US$700mn financial structure for Metro Santiago in 2006, and under its ECA tranche the Cesce facility has been drawn. This transaction broke new ground in that the funds have been made available without a ministry of finance guarantee. There was just a partial guarantee on the local bank tranche.
This previous deal also included the largest local currency syndication seen in the Chilean market at that point.
Supporting the continued expansion of Metro de Santiago is always a challenging exercise given the speed at which the transportation system has been expanding.
Metro de Santiago is one of the most extensive metro systems in South America, and has a network of five lines in the Chilean city of Santiago linking 107 stations and serving approximately 7 million people.
Borrower: Metro de Santiago
Sole mandated arrangers: Banco Santander; BNP Paribas
Date signed: September 2008