A bond issue was successfully completed last month in the amount of $131,350,000,000 Colombian pesos (Approximately $38.6 million USD) to finance the acquisition of the Transmilenio Phase I and II municipal bus fleet for the city of Bogotá’s 80th Street yard. The transaction was structured by Colombia’s FDN (Financiera de Desarrollo Nacional) and the Bonus Investment Bank, with secondary market demand from a diversified mix of institutional investors dominated by insurers and investment funds.
The bonds are structured such that they will be retired from future cash flows in which the rights, privileges and benefits derived from the concession contract for the provision of the fleet concluded between the concession Patio Calle 80 and the Empresa de Transporte del Tercer Milenio – Transmilenio S.A. (“TMSA”). Likewise, the structure has a contingent liquidity line from the FDN for up to 12% of the total issue value, to cover debt service and the costs of sustaining the issue.
The bonds were 160% oversubscribed.
This operation is part of FDN’s work to seek new sources of financing for the country’s infrastructure, helping to close market gaps and promote the development of capital markets as a viable alternative for the financing of infrastructure projects.
According to the FDN, this is the first time in Colombia that a bond issuance meets the eligibility criteria established in the Sustainability Bond Guidelines, promoted by the International Capital Market Association (ICMA). Sustainalytics, a global leader in corporate governance research, qualification and analysis in environmental, social and responsible investment strategies, issued the second opinion validating compliance principles of green bonds and social bonds, since funding resources are directed to activities that contribute to pollution prevention and control, clean transport and improvement of affordable basic infrastructure.
In order to minimize the risk of the operation and incentivize the best quality in the provision of the service, the new concession model for Phase I and II of Transmilenio separated the procurement process into two components: the purchase and provision of the bus fleet on one hand, and the operation and maintenance of the fleet and maintenance yards by the other. Under the new model, specialization, knowledge and efficiency were sought both in the purchase of buses and in their operation and maintenance, as well as the management of the maintenance facilities. In addition, the concession sought to minimize operational risk, improve the quality of service for users, facilitate the achievement of financing for the acquisition of the fleet and ensure the sustainability of the system.