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The Concession

VIEWS: 12 PAGES: 8

									        Infrastructure Developer
         Bond Guarantee (Peru)


Partial Credit Guarantee, Back-stop facility
       supporting principal recovery

          Juan Mario Laserna J.




                    Slide 1
Graña & Montero Business Description

   Graña Montero is the largest engineering services group in Peru with around
    US$200 million of total assets and US$180 million in revenues, mainly
    dedicated to the business of engineering and construction services. 70 years
    of history and excellent work completion track record.

   It also provides petroleum services (fuel terminals, drilling, extraction),
    information systems, engineering and real estate developing services.
    Strategic investments in concessions and public service companies. It is the
    operator of the first toll road concession in Peru (Arequipa).

   BBB (triple B) national scale rating as a corporate by Fitch and Equilibrium,
    local rating agencies.

   Short term banking debt with high a refinancing risk and very high interest
    rates.




                                         Slide 2
Term Sheet Summary
   Bond Profile
      Amount:              US$50,000,000
      Term:                8 years
      Grace period:        6 months
        Amortization:      Semi-annual principal and interest payment
        Type of payment:   Equal coupons (principal + interest),
                            mortgage style
        Coupon amount:     US$4.3 million (with 8.5% interest rate)
        Final payment:     October 2011
        Shadow rating      A and Final rating AA+

   Guarantee Structure
      Amount:              Up to US$20 million by IDB and FMO
      Coverage:            Callable for the full amount as a back-stop facility
                            for reduction of principal under consecutive events of
                            default

                                        Slide 3
Bond Structure - Trust Structure

   Assigned Cashflows
      Level 1:   Segregated assets from non-construction subsidiaries:
                  • GMI S.A. - Information technology, platform service

                    •   GMD S.A. – Engineering service
                    •   GMT. – Toll road concession
                    •   GMP S.A. – Petroleum and fuel terminal operation
        Level 2:   Sales from GyM S.A.

        Pre-funded Debt Service Reserve Account:
                   • Equal to 2 coupons (one year debt service)




                                          Slide 4
Bond Structure – Securitization Trust
                                                           Grana & Montero
                                                                 Operations




                                           Cash Flows                                Cash Flows /
                                           from Execution                            Shares
                                           of Work Contracts                         From Concessions,
                                                                                     and Subsidiaries




                                                                      Trust
                                                                                                           In the event of Cash shortfall in the trust,
                                                                                                           G&M will fund Deficiencies
                                                  Cashflow                         Collateral              through corporate guarantee


   Excess cash after structure waterfall
   Flows back to IDeveloper Group            Debt Payment Account                                                              Full Corporate
                                                                                Debt Service
                                              (1/6 of debt service                                                             Guarantee
                                                                                Reserve Account
                                                monthly) and 100%                                                              by G&M Group
                                                in the 4th month                (12 months debt service)



                                                                                Step-in Rights              Reimbursement to
                                                                                (Shares of GMD, GMI,        guarantors from collateral
                                               Provision Account                                            pool of G&M fixed assets
                                                                                GMP, CONCAR)
                                               Acceleration Account




                                                               Financial Test                              In the event of G&M's default
                                                                                                           on the corporate guarantee
                                                                                                           IDB/FMO to cover



                                                                                                                               Partial Credit
                                                                                                                               Guarantee
                                                                Bond Holders                                                   by IDB/FMO
                                                               (debt service)




                                                                        Slide 5
Bond Structure – Internal Credit Enhancements

   Corporate Guarantee by the Graña Montero Group
     – Pre-funded and replenishable Debt Service Reserve Account
     – Immediate funding of the Debt Payment Account


   Pre-funded debt service reserve account
     – Pre-funded from the bond proceeds for an amount equivalent to two
       installments of principal and interest


   Step-in rights through trust ownership of shares
     – The shares of GMT, GMP, GMI and GMD (Originators of the
       Segregable Assets – Level 1) are transferred to the securitization
       trust.




                                     Slide 6
Partial Credit Guarantee - Triggers

   The Gurantee will be triggered only after a set of events and actions occur:

        Waterfall : the cashflow assigned to the trust are insufficient to cover the
         debt service due in the DPA.
        Corporate Guarantee: The Trustee will request for the corporate
         guarantee to cover the shortfall in advance of the payment date, and the
         corporate guarantee does not deliver the required amount;
        Provision Account and Acceleration Account : The Trustee has utilized all
         amounts available in PA and AA but it is still insufficient to cover the
         payment;
        DSRA: The balance of the DSRA is insufficient to cover the required
         amount
        Corporate Guarantee does not replenish the DSRA within the deadline




                                           Slide 7
Inter-American Development Bank
      Private Sector Department
         Capital Markets Unit

								
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