Goldman Sachs Group Inc. (GS) is seeking to sell bonds backed by Colombian highways, to help construction companies raise money for the country’s 47 trillion-peso ($23 billion) road-building program, a government official said.
Luis Andrade, head of the Colombian infrastructure agency ANI, said in an interview in Bogota that Goldman Sachs is proposing the bond sales to supplement the costs that builders are willing to bear and what banks are willing to lend. The New York-based bank would package the bonds so they’re backed by future proceeds from the highways, he said.
“The bottleneck for these projects is going to be financing,” Andrade said. “Of the investment banks, the one that’s been most attentive, and has put in time coming up with ideas, is Goldman Sachs.” The New York-based firm is talking directly with builders, he said.
Michael DuVally, a spokesman for Goldman Sachs, didn’t respond to an e-mailed request for comment.
While Colombian President Juan Manuel Santos has promised the road projects as a way to stimulate economic growth, builders have struggled to line up financing. Last week, ANI extended the bid-submission deadline for the first project by a month to March 7, after the country’s banking association said project bidders needed more time to complete their proposals.
Under the new program, builders must finance projects themselves and recoup their investments later through toll-road collections and government payments. The country previously had made upfront payments to builders, a practice that led to allegations of corruption and inefficiency.
Some of the 10 approved bidders for the first project -- a road from Puerto Salgar to Girardot in central Colombia -- were ready to submit proposals by the original Feb. 7 deadline, according to Andrade.
“A couple of the firms told us they were ready and even that they were interested in going ahead because they knew that others weren’t,” Andrade said. “We want ample participation and of good quality, and if we see that because of timing we won’t get it, then we’ll give a little bit more time.”
The ANI will use the extra month to make “small adjustments” to the contracts on the concessions, and the government is studying whether to increase the fraction it pays builders in dollars instead of the local currency, he said.
“We’re considering offering to pay more of it in dollars, so that they can take on more debt from outside sources,” Andrade said. “It varies from project to project. We’re seeing how we can get it higher so that more or less 30 percent of the project can be financed in dollars.”
Colombia’s development bank, Fondo de Desarrollo Nacional, is also planning to announce by Feb. 14 the prices and conditions under which it will lend to the projects, Andrade said.
Colombia is expecting banks and institutional investors to finance a combined 28 trillion pesos, Andrade said, with the government willing to fund 6 trillion pesos through its development bank. Another 4 trillion pesos would come from multilateral agencies such as the World Bank’s International Finance Corp., he said.
The Colombian development bank may provide subordinated loans to the projects for as much as 15 percent of the total cost, Clemente del Valle, the bank’s president, said last week in an interview.
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