Oct. 9 (Bloomberg) -- Interconexion Electrica SA, Latin America’s biggest power line operator, will create a company that may sell bonds and seek partners to help finance a 5.6 trillion peso ($3 billion) highway project through the Andes mountains, Chief Executive Officer Luis Fernando Alarcon said.

“We need to provide capital for that new company we’re creating which is why we’re hoping to have other partners for that company such as pension funds,” Alarcon said in a telephone interview from the company’s headquarters in Medellin, Colombia. “The company will take on debt, which could include issuing bonds and bank loans.”

ISA, as the company is known, won the largest portion of a government project worth 10 trillion pesos for the construction of three highways in central and northern Colombia. ISA will expand and operate 900 kilometers (559 miles) of highway running out of Antioquia province.

The company is benefiting from increased government infrastructure spending as President Alvaro Uribe seeks to pull the South American country out of its first recession in a decade. ISA shares have jumped 83 percent this year on the Colombia Stock Exchange, the fourth-best performer in the IGBC benchmark index, which gained 47 percent during the same period.

ISA surged 2.2 percent to 12,980 pesos in Bogota trading, the highest since the shares started trading in March 2001. Colombia’s IGBC Index declined 1 percent.

‘Euphoria’

The company, which is 53 percent owned by the government, is also considering power transmission projects in Brazil, Peru and Guatemala, said Alarcon.

“Investors are betting that new infrastructure projects will begin to pop up as the global economy recovers, and that ISA will take part in some of those in the region,” said Juan Camilo Dauder, an analyst at Medellin-based brokerage Interbolsa SA. “The euphoria we’ve seen in the market in general has led some shares to become overvalued, including that of ISA.”

Interbolsa predicts the shares will drop to 12,137 pesos by year-end.

ISA will likely sign the concession contract, which includes a 2 trillion peso investment by the government and 3.6 trillion peso investment by the company, in a month, Alarcon said. After the signing, it will take the company about a year to design the project before construction starts, he said. Construction will take 15 years and the concession will last between 30 and 40 years, depending on the project’s rate of return, he said.

To contact the reporter on this story: Andrea Jaramillo in Bogota at ajaramillo1@bloomberg.net

Last Updated: October 9, 2009 15:06 EDT