WestLB and Panama’s Banco General have closed a US$175mn local public bond issue for Bahia Las Minas (BLM), a large thermal generating company in Panama, owned by Suez Tractebel and the government of Panama.

The proceeds of the bond will be used to finance the partial conversion of a 245MW power plant from heavy fuel oil to coal-burning technology.

The project is located in Colon, near the northern entrance to the Panama Canal and is set to be one of the largest project financings in Central America this year.

The project financing package consists of a US$100mn, 12.5-year series A tranche, and a US$75mn 14.5-year series B tranche. It has been structured as a hybrid transaction to attract both foreign and local banks. The deal is also the first time in the Panamanian bond market that a bond using multiple draws has been issued, and it is also the first time it has been issued in the local market under New York law. The conversion project is aimed at reducing certain emissions, without increasing carbon dioxide output, and it will also significantly lower BLM’s fuel costs.

Issac Deutsch, head of natural resources for WestLB’s Latin America group, comments: “After the conversion, these units will be the lowest cost thermal facilities in Panama and will rank second only to run-of-river hydro-generation on the dispatch merit order.”

Jean-Pierre Leignadier, head of investment banking for Banco General, adds: “Banco General is pleased to partner with WestLB in structuring this innovative financing for BLM and bringing on line the first coal-based generation plant in the Panama electric market.”

The entire project financing package consists of a US$100mn, 12.5-year series A tranche, and a US$75mn 14.5-year series B tranche.