PF Archive

Panama Canal: Locked in

19 11 2008

The Autoridad del Canal de Panama (ACP), the authority that operates the Panama Canal, has raised $2.3 billion in senior unsecured debt from multilateral institutions for its expansion project. The ACP expects that the project's capital cost will be $5.25 billion, and around 57% of this will be funded from operating revenues at the canal. The five-year construction period involves four stages, each with its own design-build contract. The construction of a third set of locks in the canal is the most challenging, and most expensive, of the stages. This contract will be awarded early in 2009, and four respondents to a request for proposals have been shortlisted to bid. Other works include dredging the canal entrances on the Atlantic and the Pacific; deepening and widening the existing navigation channels; and increasing the operational capacity at Gatun Lake, which provides water to the waterway. Five multilateral lenders are providing the debt; the Japan Bank for International Cooperation (JBIC), the European Investment Bank (EIB), the Inter-American Development Bank (IDB), the International Finance Corporation (IFC), and Corporacion Andina de Fomento (CAF). All the tranches have the same structure, but their pricing varies. The debt will all have a 20-year maturity, with a ten-year...