Sub-underwriting on the Eu522 million ($638 million) Ocana-La Roda real toll closed in early August and lenders' credit committees were quick to swallow the deal whole. A very limited general syndication of the remaining Eu25-30 million will now go ahead this month.

Sponsored by a Ferrovial-led consortium with Europistas and Budimex, the Ocana-La Roda project is situated in central Spain. The new highway will run for 177km, of which 118km will be real tolled. The real toll will effectively be an extension of Madrid's RIV radiale real toll.

Despite being a real toll, the deal has pulled in even tighter pricing than predicted in the original bid - a measure of the international appetite that is now available for Spanish toll road debt.

Ocana-La Roda is the first of the four real tolls in Phase 2 of Spain's second national toll roads programme to come to the bank market. The four concessions require a total investment of around Eu1.7 billion. The roads were all offered as 36-year DBFO concessions - extendible to 40 years depending on operational performance - by the Ministry de Fomento in March, and the speed with which Ocana-La Roda has got to market and closed is testimony to the popularity of Spanish roads with lenders: All the concessions come with extensive government risk mitigation as outlined in Spain's old toll road concession law. The new PPP concession law of last year became effective one month after the concessions were tendered.

The deal's structuring is designed with future refinancing in mind and comprises an 8.5-year miniperm priced at a flat 110bp over Euribor through both construction and operations. Sub-underwriters were offered Eu70 million tickets with a final take of Eu50 million for fees of 80bp. The predicted underlying tenor on the financing is around 30 years, comprising this 8.5-year deal and a further 22-year (probably bond) financing when the miniperm comes to maturity.

Pricing for all the remaining tolls - with perhaps the exception of Madrid-Toledo, where the medium-size sponsors Corsan-Corvian and Comsa will not have the same clout with lenders - is likely to be around the same benchmark.

The mandated lead arrangers - BBVA (which was also bid adviser to the sponsors), Royal Bank of Scotland (RBS), Santander Central Hispano (SCH) and SG - signed up in late July and pulled in La Caixa, Banco Sabadell, HSBC and Caixa Geral the following month as co-arrangers.

In addition to the four co-arrangers, ICO and ACF have also been asked to join the deal but have yet to confirm participation with the leads.

The road is seen as a peaking route and toll revenues are expected to build slowly. That slow build is reflected in the loan life cover ratio of 1.6-1.7x up until refinancing. Spanish consulting company Taryet provided traffic forecasting with Halcrow auditing.

Given the slow build toll revenue predicted, the fact that Ocana La Roda has pulled in debt at a considerably lower price than previous Spanish real toll risk is all the more surprising.

The low pricing - which according to arrangers was not a problem in selling down the deal - is symptomatic of the growing liquidity finding its way into Spain. UK and Portuguese banks are making a strong bid for a slice of the Spanish market in which the toll road sector produces the majority of the flagship deals.

And even for those international banks that have long had a presence in other Spanish sectors, in the past the Spanish roads sector has been an all-Spanish club. Consequently the roughly 60-40 spread of debt between domestic and foreign banks is a new phenomenon in Spanish roads lending.

The deal is also a boost for the real toll concept, which is not popular with Spain's new PSOE (socialist workers party) government. The four concessions currently in the market were originally seven under the old regime. Five of the seven were tendered at the end of last year with the remaining two expected to emerge later this year. One of the five - Parbayon-Zurita - was not awarded, because none of the bids met the RFP, and was expected to be retendered. With the arrival of the new government the remaining three concessions have been put on hold and are widely anticipated to emerge as shadow tolls or a combination of both real and shadow.

The new government is anti-real toll on the grounds that the system is not as fair as shadow tolling, where the financial burden is ultimately spread across the tax system. Conversely, it is faced with meeting EU public deficit quotas and does not have the money to do so. Therefore putting shadow tolls on central government books is not a realistic option.

The next of the awarded concessions into the bank market is expected to be FCC-Ploder's Eu531 million Cartagena Vera backed by Banesto and ACF which was in due diligence in June. Banesto is citing a late 2004 to early 2005 close.

Ocana-La Roda Real Toll
Status: Awaiting limited syndication
Size: Eu522 million
Description: 36-year DBFO real toll concession financing
Sponsors: Ferrovial; Europistas; Budimex
Sponsor advisor: BBVA
Mandated lead arrangers: BBVA (agent); Royal Bank of Scotland; SCH; Societe Generale
Sub-underwriters: La Caixa; Banco Sabadell; HSBC; Caixa Geral; ICO and ACF yet to confirm.
Legal counsel to sponsors: In-house
Legal counsel to lenders: Cuatrecasas
Traffic forecasting: Taryet
Traffic auditor: Halcrow
Model auditor: Deloitte & Touche