Landmark Notes Issuance For Jamaican Highway Project

• Published date: 29 June 2020
• Subject Matter: Finance and Banking, Government, Public Sector, Real Estate and Construction, Transport, Financial Services, Project Finance/PPP & PFI, Rail, Road & Cycling, Government Contracts, Procurement & PPP, Construction & Planning
• Law Firm: Mayer Brown
• Author: Mr Douglas Doetsch, Daniel Whitmore, Juan Pablo Moreno and Nicholas M. Delgado

Abstract: This article provides an overview of the structure and credit highlights of the US$225 million 5.75 percent senior secured notes issued by TransJamaican Highway Limited, the Jamaican toll road concessionaire. The bond issuance was highly successful as a result of several factors: the toll road is strategically located, the asset is fully operational, the operator has managed the toll road since its inception, and the financing package includes adequate structural protections.

The issuance of US$225 million 5.75 percent senior secured notes in February 2020 by TransJamaican Highway Limited (TJH), the Jamaican toll road concessionaire, followed by the initial public offering of shares in TJH in March, were landmark events for the capital markets in Jamaica and the region.

TJH holds the concession to develop the East-West Highway, the first phase of Jamaica's Highway 2000 Project. Not only is the toll road essential for Jamaica, it is a proven asset, with a track record of consistent cash flow generation. Leveraging this, TJH was able to use the bond issuance to refinance its higher-priced debt with predictive, long-term financing, and the issuance paid a significant dividend to its parent.

Background

TJH is the concession holder under a 35-year agreement entered into in 2001 with the National Road Operating and Constructing Company (NROCC), the grantor of the concession. NROCC is a wholly owned Jamaican government company and represents the government's interest in the Highway 2000 Project. The East-West Highway concession, via an international tender, was awarded in 2001 to Bouygues Travaux Publics (Bouygues), a French contractor, in partnership with VINCI, a French toll operator.

Construction on the toll road commenced in February 2002 and was completed in August 2012. Operating and maintaining the road is the responsibility of Jamaica Infrastructure Operator Limited (JIO), which is owned by VINCI Concessions (51 percent) and Bouygues (49 percent).

TJH was initially formed and owned by Bouygues, then later joined by Autoroutes du Sud de la France SA, a subsidiary of VINCI. In 2011, in connection with a refinancing facility provided by a group of multilateral development banks, International Finance Corporation and Société de Promotion et de Participation pour la Coopération Economique subscribed for additional shares. On December 20, 2019, in preparation for the IPO in March 2020, NROCC purchased 100 percent of TJH's equity from these former...