With the support of a new Senior Debt Credit Enhancement financing instrument (SDCE-F) from the European Investment Bank, the concession company PANSUEVIA GmbH & Co. KG, along with its 50:50 joint venture partners HOCHTIEF and STRABAG, has successfully completed the long-term financing of the A8 A-Modell motorway project in Germany. The senior debt was placed among institutional investors, commercial banks and the EIB. This is the first transaction where EIB has provided the SDCE-F.
The new instrument is a subordinated loan equivalent to the funded version of the Project Bond Credit Enhancement (PBCE). In the A8 transaction, SDCE-F has been applied to enhance both bond and bank financing allowing the Sponsors to structure the most efficient financing solution in one of the most competitive markets in Europe. As a new subordinated debt instrument, the SDCE-F has been now fully developed and tested in the infrastructure market. The product is now ready to be deployed in new greenfield projects improving the senior creditors’ risk profile by enhancing the overall credit quality to solid investment grade. The new SDCE-F can be used generally in to finance projects with construction and operational risks (i.e. traffic, merchant etc.).
EIB Vice President Ambroise Fayolle emphasized: “Thanks to the A8 project closing, a new EIB credit enhancement facility, the SDCE-F, has been successfully introduced in the market. This new instrument can support a wide range of projects in any EU jurisdiction. The aim of the new product is to implement an important goal of the European Community, namely, to provide easier access for private capital to investments in long term infrastructure.” He also commented: “The EFSI agreement and CEF* delegation agreement set the ground rules for supporting projects, whereby the Commission provides a capital contribution in order to share the risks taken by the EIB. These agreements allow the Bank to offer higher risk products such as credit enhancement transactions in a sustainable way. ”
This new long-term financing agreement replaces the original financing from May 2011 for the public-private partnership (PPP) motorway widening project between Ulm and Augsburg. The financial close took place on 20 June 2016 with the banks KfW Ipex-Bank, Nord LB, SEB and Société Générale, the institutional investors MEAG and LBPAM (La Banque Postale Asset Management). The EIB will, in addition to the SDCE-F facility, also maintain its position as a senior lender. This successful closing allows the A8 A-Modell Ulm–Augsburg, in which the private sector holds an approx. € 400 million investment stake, to take advantage of the currently improved conditions on the financial markets and so be well-prepared for the future.
The approximately 58 km section of the A8 between Ulm and Augsburg was opened to traffic on schedule in September 2015 after slightly more than four years of construction. PANSUEVIA designed, financed, and carried out the widening of the section to six lanes and took over maintenance and operation of the section for a period of 30 years. Construction was carried out by a joint venture consisting of STRABAG Großprojekte GmbH, HOCHTIEF Infrastruktur GmbH and Ed. Züblin AG.
* Connecting Europe Facility (CEF)