From complex loan arrangements to large-scale initial public offerings, innovation was a hallmark of several deals in 2012. These are some of the most interesting of the year.
When BNP Paribas began to put together a $390 million loan for a Colombian consortium to operate, manage and expand the airport in the capital, Bogota, many commercial banks balked at participating.
The Opain consortium, made up of five local construction and infrastructure companies, needed the funds to complete the terms of the 20-year, $1.2 billion concession contract they won in 2007.
BNP Paribas, and its partner, Bancolombia, met their customers' needs by thinking outside the box. "Many commercial banks were reluctant to take on 14-year debt at a time of US dollar liquidity issues," said Jean-Valery Patin, managing director and head of BNP Paribas Latin America.
"That is what made us think about seeking help from multilateral lenders such as the Inter-American Development Bank (IDB) and the Development Bank of Latin America."
But in an added twist, BNP Paribas and Bancolombia approached the China Development Bank (CDB) even though it had minimal experience in Colombia. Nonetheless, the CDB put up $175 million for the loan, taking the lion's share of the credit facility. The IDB approved $165 million and CAF $50 million.
"The idea to seek capital from China was due to that country's decision to join the IDB as a non-borrowing member country," said Patin. "This was the first time that the CDB had participated in a transportation project in Latin America."
Innovation and creativity were necessary ingredients last year in Latin America as bankers faced the lingering effects of the US financial meltdown, as well as the crisis in the Eurozone. Many financial institutions were still reluctant to lend. Others tightened requirements. But deals did get done, and often with unexpected benefits for clients.
Opain was a case in point. The inclusion of multilateral lenders resulted in lower borrowing costs and the certainty that the deal would be made, said Philippe Birebent, a director at BNP Paribas, who worked on the transaction. "Our client wanted to be certain that they would receive the funds, given the deadlines for expansion works in the concession agreement. That was paramount," he said.
The involvement of the development banks did come at a cost. More work was involved because the loan concession not only had to meet the requirements of Opain's five shareholders, but also of the participating multilateral lenders.
Slower execution is not uncommon in the region. "In Latin America in general, deals take a longer time to complete," said Hernan Rissola, head of advisory for Latin America at HSBC Securities (USA) Inc. "Many of the deals completed, and in the works, have a long history."
Many of the deals consummated in 2012 were years in the making, discussions starting before the US meltdown and then concluding as conditions improved. Regional differences also played a part.
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