Colombia's 4G programme unscathed by Odebrecht, says FDN

Development bank FDN is optimistic that Colombia’s flagship 4G road-building programme will emerge unscathed from the Odebrecht corruption scandal as the lender looks to play a more active role in the financing of the projects

  • By Oliver West
  • 02 Apr 2017
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Copyright: Flickr - Christian Cordova
Clemente del Valle, chief executive of Colombian government-owned FDN (Financiera de Desarrollo Nacional), has told GlobalMarkets that he does not expect any “serious complications” for the 32 projects in the 4G (Fourth Generation) programme as a result of the Odebrecht affair.


In December last year, Odebrecht admitted paying $788m of bribes in 12 different countries.

FDN is co-ordinating the 4G programme’s roughly $18bn of financing, of which $4.5bn has already been raised through a mixture of local and international bank debt, local and international bond issues, and lending tickets provided by FDN itself.

Despite both Odebrecht and fellow Brazilian Andrade Gutierrez having looked at the projects in the past, no Brazilian firms participated in any 4G road building concessions, meaning the issue has not “directly contaminated” the programme, according to Daniel Velandia, chief economist at Credicorp.

It was, however, a majority shareholder in the concessionaire of an existing road project in Colombia known as Ruta del Sol. This concession has been cancelled, will be liquidated imminently, and the government has targeted May for the retendering of the contract.

Colombian banks had lent around $800m to Ruta del Sol, raising worries that the their appetite for lending to similar projects may be diminished.

“We are assuming that local banks will be more stringent, and triple check before any disbursements of money,” said Velandia. “But so far everything has been very well managed, and we are confident — even if the execution of projects takes a little longer.”

Del Valle admitted that it was clear that local bank exposure to the Ruta del Sol project had affected the “mood” among Colombia’s lenders. But the liquidation will allow for banks to begin to be repaid and should reassure them about future projects.

“Banks are concerned and are putting pressure on the government to ensure a fast and fair solution, and I feel the government is doing this,” said the CEO.

Colombian banks provided around 48% of the $4.5bn financing to the eight projects closed in the first round, with a further 25% coming from foreign lenders.

“With international banks it has been a much smoother process,” said del Valle. “They see the whole world, and they can see that Colombia is becoming faster and more transparent in resolving these issues.

“They also see the determination of the government to give solutions that are rational and effective.”

FDN to underwrite

Meanwhile, FDN is busy working on financing packages for the next round of projects, and expects 12 or 14 of the 24 remaining deals to reach their financial close this year, mostly in the second half.

And del Valle says that FDN, which directly provided around 7% of the financing to the first eight projects, will be more active in the second round. The development bank’s proportion of the financing will increase, with last year’s capitalisation, using proceeds from the government’s sale of energy company Isagen, having roughly doubled its lending capacity.

But the bank will be particularly more visible on those deals that include bond components.

“Previously we were passive, just providing credit enhancements to the bonds,” said del Valle. “This time we will participate as an underwriter and support the bond allocation process, moving from backstage to the front seat alongside the leading investment banks.”

Some 22% of the financing for the first eight projects came from capital markets, thanks to two deals — led by Goldman Sachs — for the Pacifico 3 and Costera projects, and del Valle would like to see “one or two bonds, at least” in the next round.

“We know that as the 4G programme evolves our role has to increase,” he says. “We think we will have more impact by having more control, and we also need to build our credentials as co-leaders and co-structurers.” 

  • By Oliver West
  • 02 Apr 2017

All International Bonds

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • 13 Mar 2017
1 JPMorgan 94,925.33 384 8.39%
2 Citi 87,531.58 331 7.74%
3 Bank of America Merrill Lynch 84,341.49 288 7.46%
4 Barclays 75,288.19 241 6.66%
5 Goldman Sachs 68,504.71 208 6.06%

Bookrunners of All Syndicated Loans EMEA

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • 16 May 2017
1 Deutsche Bank 19,381.65 47 8.82%
2 Bank of America Merrill Lynch 18,968.25 36 8.63%
3 HSBC 18,103.95 50 8.24%
4 BNP Paribas 8,911.57 55 4.05%
5 SG Corporate & Investment Banking 8,885.00 54 4.04%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • 16 May 2017
1 JPMorgan 8,369.56 33 8.53%
2 UBS 8,282.28 33 8.44%
3 Citi 6,605.58 44 6.74%
4 Goldman Sachs 6,444.85 31 6.57%
5 Bank of America Merrill Lynch 6,215.31 24 6.34%