Milestone Bond Issuance For Jamaica Toll Road

• Published date: 11 February 2021
• Subject Matter: Finance and Banking, Real Estate and Construction, Financial Services, Construction & Planning
• Law Firm: Mayer Brown
• Author: Mr Douglas Doetsch and Daniel Whitmore

The issuance of $225 million 5.75% 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 2020, were watershed events for the capital markets in Jamaica and the Caribbean region.

TJH is the concessionaire to develop the East-West Highway, the first stage of Jamaica's Highway 2000 Project. The toll road is an essential, proven asset for Jamaica with a performance history of consistent cash-flow generation. Leveraging this, TJH was able to use the bond issuance to refinance its higher-priced debt with more predictive, long-term financing, and the issuance paid a significant dividend to its shareholders.

Concessionaire and Sponsors

TJH is the concession holder under a 35-year concession agreement entered into in 2001 with the National Road Operating and Constructing Company (NROCC), the grantor of the concession. NROCC is wholly owned by the Jamaican government and represents the government's interest in the Highway 2000 Project. The East-West Highway concession, by way of an international tender, was awarded in 2001 to Bouygues Travaux Publics (Bouygues), one of France's largest construction companies, who partnered later with Autoroutes du Sud de la France SA (ASF), a subsidiary of VINCI, the 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%) and Bouygues (49%).

In 2011, TJH, NROCC and the Government of Jamaica approached the Inter-American Development Bank and other multilateral development banks to refinance TJH's existing debt and in connection therewith, International Finance Corporation and Société de Promotion et de Participation pour la Coopération Economique subscribed for additional shares of TJH. On Dec. 20, 2019, in preparation for the IPO in March 2020, NROCC purchased 100% of TJH's equity from these former shareholders and from Bouygues and ASF.

Credit Highlights

Mature and Essential Asset. The EastWest Highway is the only high-speed road connecting Kingston, Jamaica's capital, and its other highly populated towns to the west such as Saint Catherine and Clarendon. The toll road has limited competing roads, and the ones that do exist are not as safe or convenient; some sections of the competing roads have...