MIGA Guarantee Backs Panama City Metro Line
View the press release in Spanish
Washington, July 19, 2012 — The Multilateral Investment Guarantee Agency (MIGA)—the political risk insurance arm of the World Bank Group—today announced it is supporting the government of Panama's efforts to construct a modern and integrated mass-transit system as a solution to Panama City's urban transportation issues. In connection with the financing plan for this ambitious new infrastructure investment, MIGA has issued a guarantee of $320 million to cover a $250 million loan arranged by Citi Transaction Services and Citigroup Global Markets, Inc. (Citi) including interest and other financing costs associated with the construction of Line 1 of the metro system. This project represents MIGA's first coverage of non-honoring of sovereign financial obligations in Latin America and the Caribbean.
Given the current state of transportation and mobility in Panama City's urban center, the metro project will have a positive effect on the livelihoods of the city's residents and commuters. It will reduce travel times, vehicle operating costs, and greenhouse gas emissions, while helping people living in suburban regions access jobs and educational services in the city.
"The Panama Metro is one element in a series of investments aimed at cementing Panama's position as a services hub in the Latin American region," stated Panama Minister of Economy and Finance, Frank de Lima. Roberto Roy, Executive Secretary for the Metro's Secretariat, added, "Our Metro will be very helpful in solving traffic problems in its route, and our team is elated to have MIGA's and Citi's crucial participation in the financing."
"Citi's support for the construction of the Panama Metro represents a further sign of our continued commitment to the growth and development of the country that dates back to our support for the original canal construction," said Valentino Gallo, Citi's Global Head of Export & Agency Finance. "Our cooperation with MIGA shows how multilateral organizations can support the private sector as it fulfills the need for important infrastructure projects to move forward globally." Citi is the joint global coordinator along with the Bank of Tokyo-Mitsubishi UFJ, Ltd. on the MIGA-guaranteed financing, with Mizuho Corporate Bank Ltd. serving as lead arranger.
"Vinício Fonseca, Director of Structured Finance in Latin America and Angola for the Brazil-based Construtora Norberto Odebrecht S.A.—the company that is the majority owner of the engineering, procurement, and construction contractor for the Line 1 metro (the Line One Consortium)—commented, "The development of new capital structures that make long-term finance viable while optimizing funding costs plays a fundamental role in our ability to better serve clients, especially in the current state of global financial markets." He added, "We are honored to have contributed, with Citibank and MIGA, to this pioneering project in Panama." The Line One Consortium is a jointly-owned enterprise of Odebrecht and Fomento de Construcciones y Contratas S.A. of Spain.
"We're very pleased to support a project that will serve Panama's residents, in an environmentally friendly and sustainable way," said Izumi Kobayashi, MIGA's Executive Vice President. "Insuring large and complex infrastructure projects such as this one is a key priority for MIGA, and a demonstration of how we can support the strategic development objectives of our member countries."