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President of Chile and head of IDB sign for credit guarantee for upgrading toll road connecting Santiago and Valparaiso

SANTIAGO, Chile -- Chile President Ricardo Lagos Escobar and Inter-American Development Bank President Enrique V. Iglesias today participated in a signing ceremony for a $75 million IDB credit guarantee the Bank’s first private sector credit guarantee to support the upgrading of the 109.6 kilometer toll road linking Santiago with Valparaíso, the country’s main port.

The guarantee will back engineering, construction, operation, and maintenance for the project, which will also include expansion of a 2.3 kilometer road (Ruta Las Palmas) linking Valparaíso with Viña del Mar and the construction of a new, 18 kilometer road (Troncal Sur) linking Viña del Mar with the cities of Quilpué, Villa Alemana and Peñablanca. Among the new works will be two new parallel tunnels, eliminating a bottleneck in which four-lane traffic is stalled at tunnels that now serve only two lanes, and the construction of toll plazas and pedestrian bridges. The total project cost is approximately of $416 million. Project sponsors are ACS and SACYR from Spain.

Rutas del Pacífico S.A., a single-purpose company dedicated to carrying out the toll road concession contract, will mobilize sources of long-term domestic capital to finance the project through the issuance of a local currency bonds for approximately the equivalent of $306 million, with principal and interest payments covered by the IDB and co-insurers. The well developed private pension fund system in Chile creates an opportunity for the IDB to provide credit enhancements that will enable domestic savings held by pension funds to be invested in infrastructure.

In 1995 the IDB opened a Private Sector Department to provide loans and guarantees for infrastructure projects. The toll road guarantee is the Bank’s first private sector credit guarantee operation. Previous IDB guarantees have covered partial political risk.

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