Antioquia’s ‘Pacifico 1’ Highway Reaches Financial Close; Construction Starts

The Corficolombiana-Iridium “Covipacifico” consortium announced June 9 that they’ve reached financial close on the crucial “Pacifico 1” divided-highway project linking Medellin’s southern suburbs (Ancon Sur) to the Cauca River at Bolombolo – and connecting to new “fourth generation” (4G) highways all the way to the Pacific port of Buenaventura.

The long-awaited financial close on the COP$3.58 trillion (US$1.2 billion) project follows a May 26 announcement by Colombia’s Agencia Nacional de Infraestructura (ANI) that the “Pacifico 1” highway project had just obtained an all-important environmental license.

“We have good news for Antioquia,” ANI president Luis Fernando Andrade announced during the “Expotransporte” conference in Medellin.

Besides the now-finalized “Pacifico 1” project, “all the 4G highway projects in Antioquia are moving ahead, the majority of which have already launched the construction phase,” Andrade added.

“Pacifico 1” will be 50.2 kilometers in length and include two tunnels (3.6 kilometers long) at Amaga and another set of tunnels (1.3 kilometers long) at the Sinifina river near Bolombolo. In addition, the project will involve construction of 54 new bridges and three intersections.

Thanks to a new chain of highways (Pacifico 1, 2 and 3), “Medellin and the coffee region will have a new, faster alternative to reach Buenaventura, favoring international commerce,” according to ANI.

The “Covipacifico” consortium partners meanwhile announced that they’ve organized finance credits totaling COP$2.55 trillion (US$858 million) including internationally sourced senior debt, plus partner equity, plus assumed construction-stage revenues.

It’s the first time that a Colombian “4G” project has won funding from international banks, “obtained under the best conditions for these type of projects,” according to a joint press statement from the partners.

Of the total 50.2 kilometers, 32.2 kilomters will be divided highway and 18 kilometers will be two-lane highway, according to the partners.

In total, five Colombian banks (including subsidiaries of Grupo Aval y Davivienda) and four international banks (Crédit Agricole, Mizuho, Caixaban and Sumitomo Mitsui Banking Corporation) participated in the financing. This includes separate tranches of COP$2.12 trillion (US$714 million) and a dollar-denominated US$150 million tranche, according to the partners.

The stockholders of the Covipacifico consortium themselves will put-up another COP$640 billion (US$215 million) in equity, according to the partners.

“With this financial close, all the resources needed for the project execution are now in place,” added Mauricio Millan, general director of Covipacifico.

Under the terms of finance, the concession partners will receive certain payments upon completion of each phase of construction, he added.

In Colombian peso terms, finance interest rates were set at IPC plus 7% during the construction phase and IPC plus 6% during highway operation phase. For U.S. dollar finance, interest rates were set at Libor plus 2.5% during construction, plus rates varying between Libor plus 2.75% and Libor plus 3.25% during highway operation phase, according to the partners.