22 January 2005 – LAWFUEL – The Law News Network – The Mexican State …

22 January 2005 – LAWFUEL – The Law News Network – The Mexican State of Nuevo Leon’s securitization of US$200m in future toll-road revenues was named Project Finance International’s “Infrastructure Deal of the Year.” Thacher Proffitt’s Mexico City office served as counsel to the underwriter.

Closed in December 2004, the deal represents an advancement of the local currency infrastructure sector in Latin America and an advancement of the LatAm project-related securitization market. The deal’s financial structure represents a new way for healthy municipalities throughout the LatAm region to tap money at a good interest rate for future public-infrastructure investments.

Red Estatal is the longest toll-road financing ever done in Mexico on a project basis, as well as the longest wrapped deal in Mexico and the first insured financing for a state infrastructure asset. The 25-year deal was placed in the local markets by Banorte and wrapped by MBIA; PF Associates of Chile advised the state on the structure. Red Estatal is a pioneering deal because the structure secures pure revenues from an existing infrastructure project on a non-recourse basis. The state has owned and operated the toll road between Cadereyta and Monterrey for the 16 years of its operating history, and will not compromise it to the private sector. Rather, the state has now assigned all collection rights to a new non-recourse trust in order to receive the proceeds upfront. Now, Nuevo Leon state has access to the US$200m in securitization proceeds for its own use, including for new investments in state infrastructure. But by virtue of the road’s operating history, Nuevo Leon did not have to pay a premium interest rate to compensate for any new toll road’s greatest risk: Ramp-up and the first 10 years’ worth of operating history.

“Infrastructure Deal of the Year” will be awarded in London during the January 20th dinner hosted by Project Finance International, a Thomson Financial publication.

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