IDB Invest Structures Its First Project Bond in the U.S. Market to Finance Paraguay’s First PPP: Rutas 2 y 7
IDB Invest has structured and purchased its first project bond in the U.S. market to provide $219 million worth of financing to Rutas del Este S.A. for the design and construction of national roads 2 and 7 in Paraguay. Rutas del Este is a consortium comprised of companies Sacyr Concesiones and Ocho A.
The deal consists of an innovative financial structure designed by IDB Invest to complement the original financial package provided in 2019. This new bond will cover the remaining project costs for engineering, procurement and construction, and other transaction costs. This facility will replace IDB Invest’s prior commitment.
The project will contribute to improving the level of service and road safety in one of Paraguay’s main corridors of key importance for economic activity. The doubling of lanes in 80 percent of routes 2 and 7 will reduce traffic congestion, particularly due to cargo transportation. It will also save travel time between Asunción and Ciudad del Este, the two biggest cities and economic centers in the country.
Road quality improvement will also reduce transport operation costs and the probability of accidents, improving safety for users. The project has a total cost of approximately $530 million and is the first public-private partnership (PPP) contract signed within the framework of Paraguay's PPP Law, which seeks to attract direct foreign investment to the country. The concession was granted in 2016 and consists of the extension and improvement of 140km of road.
This is the first time IDB Invest participates in the structure and purchase of a capital market issuance designed to provide financing to a transport project. With this bond, the IDB Group has developed an innovative structure that can offer the market and its client an efficient and scalable instrument, assuming construction risk in this type of projects and the potential to unlock the mobilization of institutional investors.
This deal is expected to contribute to three of the UN Sustainable Development Goals (SDGs): Decent Work and Economic Growth (SDG 8), Industry, Innovation, and Infrastructure (SDG 9), and Alliance for the Goals (SDG 17).
About IDB Invest
IDB Invest, a member of the IDB Group, is a multilateral development bank committed to promoting the economic development of its member countries in Latin America and the Caribbean through the private sector. IDB Invest finances sustainable companies and projects to achieve financial results and maximize economic, social, and environmental development in the region. With a portfolio of $13.1 billion in asset management and 385 clients in 25 countries, IDB Invest provides innovative financial solutions and advisory services that meet the needs of its clients in a variety of industries.
About Rutas del Este S.A.
Rutas del Este is a special purpose vehicle created under Paraguayan law as a corporation to undertake the design, financing, construction, maintenance and operation of the Routes 2 and 7 project. Rutas del Este started operations in 2017 with the activities of Tranche 0.