Project finance loans in Latin America and the Caribbean declined in the first quarter of 2016, compared to the same period last year, according to data from Dealogic.
Lenders allocated $2.37bn to 13 projects in Latin America in Q1 2016, down from $3.97bn for 39 projects in the same period in 2015.
The economic slowdown in the region and political events, such as the elections in Peru and the turmoil in Brazil, caused companies to lower investments and stopped deals from coming to the market, sources told LatinFinance.
With a thin pipeline of deals, competition remains high among lenders, even if they are taking a more cautious approach, sources said.
SMBC led project finance lenders in the first quarter this year with $253m, followed by Chile’s BancoEstado with $243m. Santander had placed first in the same period last year with $633m, while Brazil’s Bradesco was runner-up with $521m.
Project finance bankers said they expect to see more lending activity through the rest of the year, as several countries in the region push ahead with procuring public-private partnerships for infrastructure development. Sources listed Mexico, Chile, Central America and Colombia as possible bright spots, while they said Paraguay and Argentina have drawn attention as potential markets where infrastructure investments are needed.
Some projects in Colombia’s 4G highway concessions program have reached financial close and others are moving ahead. Colombian developer Mario Alberto Huertas and its Costa Rican partner Meco received COP900bn ($316m) in financing for the Autopista Conexion Pacifico 3. They are now working on financing arrangements for the Autopista Girardot-Honda-Puerto Salgar and the Autopista Cartagena-Barranquilla.
Another 4G concessionaire, Covipacifico, is negotiating the financing terms for the Pacifico 1 toll road, while Autopistas del Nordeste is arranging the funding for the Autopista Conexion Norte.
In Mexico, Fermaca is understood to be negotiating the financing for two natural gas pipeline concessions that it won in March, while Grupo Carso is also in talks with lenders for a roughly $380m loan to finance the Samalayuca-Sasabe natural gas pipeline.
In Chile, Spain’s Assignia Infraestructuras and Mexico’s GIA are negotiating a loan for roughly $300m for the Hospital del Salvador concession and Italy’s Astaldi is raising the equivalent of $250 million for the Hospital Felix Bulnes.
Elsewhere, the presence of Brazilian builder Odebrecht has raised concerns and delayed the financing for some infrastructure concessions. In Peru, Odebrecht Latinvest is selling its 55% stake in Gasoducto Sur Peruano (GSP). In Panama, Citi has withdrawn from the lending group for the second line of the Panama City subway, where Odebrecht is working alongside Spanish builder FCC. In Colombia, Navelena, a concessionaire majority owned by Odebrecht, plans to reach financial close on a waterway PPP by June 11.