Infrastructure Project Will Ease Traffic Congestion in Capital
City, Reduce Travel Times, Increase Access from Outskirts
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.
“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.”
MIGA was created in 1988 as a member of the World Bank Group to promote
foreign direct investment into emerging economies to support economic
growth, reduce poverty, and improve people’s lives. MIGA fulfills this
mandate by offering political risk insurance (guarantees) to investors
and lenders, covering risks including expropriation, breach of contract,
currency transfer restriction, war and civil disturbance, and
non-honoring of sovereign financial obligations.
MULTILATERAL INVESTMENT GUARANTEE AGENCY WORLD BANK GROUP
1818 H Street, NW, Washington, DC 20433
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