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IDB Signs Innovative Two-Phase Financing to Support São Paulo Metro – Line 4 Project

The Inter-American Development Bank signed a long-term loan financing for the São Paulo Metro Line 4 for a total of US$368.7 million on October 7, pursuant to the award of a 30-year Public-Private-Partnership concession with the State of São Paulo.

The financing consists of a direct A loan divided into two phases and a syndicated B loan consisting of resources from financial institutions that subscribe participation agreements with the IDB.

The borrower for the transaction is Concesionária da Linha 4 do Metrô de São Paulo S.A., better known in the marketplace as “ViaQuatro.”  ViaQuatro is led by the Brazilian transportation company CCR as well as Mitsui & Co, Ltd. of Japan and Montgomery Participações of Brazil.  Technical matters within the group are led by Benito Roggio Transportes of Argentina, as well as RATP Développement of France, which operate metro lines in Buenos Aires and Paris, respectively.

The A/B Loan for Phase I is for US$309.2 million, consisting of US$69.2 million from the IDB’s ordinary capital as well as US$240.0 million in participations from commercial banks through the IDB’s B Loan program.   

In addition, the closing also includes US$59.5 million in financing for Phase II, which will be available once the Phase II obligations have been triggered under the Concession by the State of São Paulo.

The project is the first Public-Private Partnership (PPP) program launched by the State of São Paulo, Brazil, to achieve long-term financing in the international markets.  

Under the PPP the public sector will be responsible for the construction of the civil works, while the supply of rolling stock and systems and the operation and maintenance will be performed by a private concessionaire (ViaQuatro), the borrower.  ViaQuatro will be responsible for the supply, operation and maintenance of the 12.8 km Line 4, which will add about 21% of additional capacity to the metropolitan transportation system of the city of São Paulo, including connections to other existing lines.