Milbank LLP advised the Export-Import Bank of Korea (KEXIM), the Korea Trade Insurance Corporation (KSURE), IDB Invest (the private sector arm of the Inter-American Development Bank), and the other lead arrangers in connection with a $1.3 billion financing for the construction of a tunnel under the Panama Canal that will extend service on Panama City’s Line 3 Metro to the western suburbs of Arraiján and eventually La Chorrera, dramatically reducing commute times and easing chronic traffic congestion.
The Line 3 Metro project is being developed by HPH Joint Venture, a South Korean consortium made up of Hyundai Engineering & Construction, POSCO and Hyundai Engineering, and involves the first metro tunnel to be constructed under the Panama Canal. Upon completion the metro line extension is expected to benefit more than 160,000 daily users and will reduce travel times between Panama City and Arraiján from as much as two hours during peak periods to approximately 20 minutes.
The $1.3 billion financing was structured as a securitization of government payment certificates (Certificados de No Objeción, or CDNOs) and comprised three distinct tranches, with one tranche financed directly by KEXIM; a second tranche provided by IDB Invest through its A/B lending program; and the third tranche financed by a syndicate of seven international banks and supported by a credit insurance policy issued by KSURE.
“We are very pleased to have worked closely with a diverse group of agencies and lenders on this significant infrastructure financing,” said Global Project, Energy and Infrastructure Finance partner Alec Borisoff. “The Panama Metro Line 3 Tunnel will help strengthen regional connectivity and deliver meaningful benefits to communities on both sides of the Canal.”
“The Panama Canal tunnel project represents another important investment by Korean companies across a wide range of industries in the Americas,” added Seoul-based Global Project, Energy and Infrastructure Finance partner David Gartside. “We are honored to continue supporting these important efforts by Korean companies, export credit agencies, and other key stakeholders as their investments in this region continues to grow.”
The Milbank deal team was led by Global Project, Energy and Infrastructure Finance partner Alec Borisoff, along with a multi-office team that included partner David Gartside, special counsel Jeffrey Susskind, and associates Olivia Scandura, Sol Avalos, Joseph Hansik Ha and Gabriella Ferreira; together with Global Risk & National Security partner Bijan Ganji and associate Bridget Golob.
