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CAF issues bonds in Uruguay to fund water infrastructure project

  • CAF issues bonds in Uruguay to fund water infrastructure project
    Credit: CAF
  • The subscription was made through the Montevideo Stock Exchange for 2,000 million Indexed Units (UI), equivalent to some US$ 300 million, which will be used, among other things, to finance the Arazatí project.

  • The Arazatí Project proposes to use the Río de la Plata as a source of water for drinking and supplying the metropolitan area of Montevideo.

About the entity

CAF, the Latin American development bank, has successfully raised UI2 billion (US$300 million) through the issuance of bonds in the Uruguayan local market, the lender said in a recent press release.

The funds raised will be directed towards financing a water treatment plant. The 30-year inflation-linked notes were priced at a coupon of 2.25% over the sovereign interest rate, following substantial investor interest which resulted in orders totaling $633 million, according to the press statement.

UI, denoting unidades indexadas, serves as a unit of account subject to inflation fluctuations. Institutional investors contributed $624 million to the demand, with retail investors making up the remainder. The issuance was facilitated through CAF's asset management division, CAF-AM.

The Arazatí water treatment plant's total cost is $360 million, of which $200 million will be sourced from the bond sale. CAF intends to co-finance an additional $100 million using internal funds, while the remaining $60 million will be provided by "the successful bidder’s promoter consortium," according to the development bank's statement.

Miguel Ostos, CAF representative in Uruguay and director of CAF-AM Uruguay, said: "We are convinced that this fund will represent a new impulse for the development of initiatives that will result in the improvement of the quality of life of Uruguayans, such as the Arazatí project. A Service Contract designed by OSE to contribute to the security of drinking water supply to the Metropolitan System and localities in the department of San José, with the provision of 200,000 cubic meters of drinking water daily.”

"As an individual operation in the private sector, without sovereign guarantee, CAF's US$ 100 million loan to the consortium Infraestructura Arazati S.A., made up of the companies Berkes S.A., SACEEM S.A., CIEMSA and FAST Ltda. will be the largest operation in CAF's history," said Ostos.

Furthermore, CAF has earmarked the remaining $100 million from the bond issuance to support other infrastructure projects.

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