Assisting Mexican construction consortium APP Coatzacoalcos Villahermosa securitise collection rights from a toll road

Nader, Hayaux & Goebel assisted Mexican construction consortium APP Coatzacoalcos Villahermosa securitise collection rights from a toll road it is building, issuing notes worth 1.9 billion Mexican pesos (US$102 million) in an innovative project financing transaction.

Banco Invex and Monex Casa de Bolsa acted as trustee and common representative for the noteholders respectively.

This is thought to be the first note issuance in Mexico to finance a transport-related public private partnership (PPP) services agreement through the issuance of bonds rather than a bank loan.

“Most PPPs are initially financed through a bank loan or some other type of financing, which is different from a bond issuance,” explains partner Julián Garza Castañeda, who led the team at Nader, Hayaux & Goebel. “In this transaction, the initial financing was made through a bond issuance, including the necessary capital to finance construction costs,” he says. “To our knowledge, the financing structure applied in this transaction has never been done in Mexico with respect to a highway or other means of transport.”

APP is carrying out construction and maintenance work on the 134-kilometre Coatzacoalcos-Villahermosa motorway under a PPP agreement. The deal monetises future toll road revenue it will get from drivers using the motorway; it issued the notes through a trust, which is the payment beneficiary under the PPP. The proceeds from the offering will finance construction costs for the road’s development.

APP Coatzacoalcos Villahermosa is a consortium made up of Portuguese construction company Mota-Engil and Mexican counterparts Calzada Construcciones and Construcciones y Dragados del Sureste.

The deal closed on 10 October.