The first Public-Private Partnership in the U.S. with availability payments has been inked. What is noteworthy is the lack of participation by any domestic institutions.
The $1.8-billion project—which involves improvements to Interstate 595 in Florida—brings together the U.S. Dept. of Transportation, Spanish infrastructure firm ACS Dragados, and Banco Santander, Sabadell, Banco Popular Espanol, BBVA. Caja Madrid, Calxnova, La Caixa, Societe General, Caylon, Dexia, WestLB, and the National Bank of Australia.
U.S. banks were conspicuously absent from the party because “foreign banks are more inclined to provide infrastructure financing, to lend for longer term,” says David Lieberman, chief executive officer of Simpson Thacher, which assembled the bank syndicate for the I-595 project that has an amortized debt over 10 years, but has a bullet payment at maturity that is expected to be refinanced for a further 12½ years. “Most U.S. banks don’t lend more for more than five years.”
It’s not that U.S. banks aren’t interested in infrastructure, as many will be “definitely very involved as advisers to public entities,” Lieberman explains, but “they would prefer to underwrite bonds.” Lieberman expects a “higher level of activity in infrastructure because people are comfortable that these projects are more resistant to an economic downturn.”
The U.S. DOT provided a $609-million subordinated loan; ACS Dragados put in $210 million of private equity; and the banks contributed $781 million in senior loans.