Itau Said to Follow Goldman Sachs in Financing Colombia Highways

  • Brazil lender said to be preparing loan of up to $300 million
  • Goldman Sachs underwrote $260.4 million bond in February

Itau Unibanco Holding SA, Latin America’s biggest bank by market value, is preparing to lend as much as $300 million to companies building a toll road in Colombia, people with direct knowledge of the matter said.

The borrowers are a consortium building the Pacifico 2 highway under Colombia’s 4G infrastructure program, said the people, who asked not to be identified because the negotiations are private. Goldman Sachs Group Inc. participated in a 4G financing in February, when it underwrote a $260.4 million bond for the Pacifico 3 highway.

A government agency provides guarantees in the event tolls fall short of forecasts, allowing banks to book it as if it had Colombia’s sovereign risk and at the same time gain returns of a riskier security, profiting from the difference, two of the people said. The Goldman Sachs deal was rated BBB- by Fitch Ratings, one level below Colombia’s rating.

The bonds Goldman Sachs underwrote and sold to investors had a yield of 7.86 percent Monday, while Colombia’s government yield on the international markets for a bond with a similar maturity was 5.84 percent.

Itau and Goldman Sachs declined to comment. An official at the consortium didn’t respond to a request for comment.

Pacific Connection

The 100-kilometer (62-mile) Pacifico 2 road project, projected by the consortium to need 1.3 trillion pesos ($426 million) in investments, is part of a network aimed at improving the connection between Medellin, Colombia’s second biggest city, with the nearby coffee-producing region and Buenaventura, the nation’s biggest Pacific port.

The consortium that’s building the highway includes Grupo Odinsa SA with a 25 percent stake, and Construcciones El Condor SA and Mincivil SA, which each have a 21 percent stake.

The entire 4G highway plan, which the country’s development bank estimates will require 63.3 trillion pesos in credit and guarantees, is designed to help speed commerce in the country, which ranked 126th out of 140 economies for the quality of its roads on the World Economic Forum’s global competitiveness index.

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