Interview with Thomas Meyer (Wertgrund) and Rainer Schmitz (Provinzial Nordwest AM)
Thomas Meyer, Head, Transport Infrastructure Finance ...
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1 Increasing Capital Flows to Africa The Corporate Council on Africa Structured Asset & Equipment Finance 30 September 2004
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Transcript of Thomas Meyer, Head, Transport Infrastructure Finance ...
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Increasing Capital Flows to
Africa
The Corporate Council on Africa
Structured Asset & Equipment
Finance
30 September 2004
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Overview
• Imperial Bank in the African market
• Transport Infrastructure needs & possible financing solutions
• Example
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Imperial Bank in the African market
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Imperial Bank
• Corporate profile
• Owned 50.1% by Nedbank, 49.9% by Imperial Holdings
• Specialist South African asset-based finance bank
• Key markets
• Motor Finance
• Aviation finance
• Corporate equipment asset finance
• Property finance
• Medical finance
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Imperial Bank
• Specialised Finance & Treasury
• Integrated approach to traditional merchant banking products
• Transportation finance niche
• Southern Africa focus
• Products
• Debt Capital Markets
• Specialised Finance
• Corporate Finance & Investment Banking
• Transport Infrastructure finance
• Treasury
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Imperial Bank
Asset
fin
an
ce
Cap
ital
mark
ets
R725 000 000
Aircraft financing
Sole Arranger
2000
R450 000 000
Aircraft financing
Sole Arranger
2001
R1 500 000 000
Aircraft financing
Sole Arranger
2002
R300 000 000
Ship financing
Sole Arranger
2002
R930 000 000
US Ex-Im Bank
guaranteed aircraft finance
Sole Arranger
2003
R431 000 000
US Ex-Im Bank
guaranteed aircraft finance
Sole Arranger
2004
R2 300 000 000
Commercial paper
programme
Sole Arranger & Manager
2000
R3 500 000 000
DMTN Programme
Originator & arranger
2001
R2 600 000 000
IPL1, IPL2 & IPL3 bonds
Originator & arranger2001/3
R515 000 000
IBP1 tier 2 capital bond
Arranger & Manager
2002
R930 000 000
EGL01 ECA guaranteed
bond
Manager & arranger
2003
R431 000 000
EGL02 ECA guaranteed
bond
Manager & arranger
2004
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Transport Infrastructure – Asset & Equipment needs
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Transport Infrastructure - Asset & Equipment needs
• Roads:
• Equipment represents relatively small proportion of total projects – usually included in project finance
• Air Traffic:
• Airports & Air Traffic Control
• Railways:
• Rolling Stock
• Ports:
• Transportation Security Initiative
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Why Structured Finance ?
• Non-recourse finance (ring-fencing)
• No collateral – especially for BEE
• Credit risk arbitrage
• Proper risk allocation
• ECA support
• Political risk- & Monoline insurance
• Elimination of inefficiencies
• Banking costs
• Regulatory costs and taxes
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The Financing FrameworkExample
US Exim Bank (Guarantor)
Eagle Bonds Issuer
Debt capital markets
Eagle Bonds Assetco
Operating Lessor/PPP
US Manufacturer
Securityco/ trustee
Asset purchase
Guarantee
Security package
Instalment sale
Back to back loan
Commercial paper
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The Financing Frameworkcontinued
• Assetco acquires the assets from the US manufacturer
• Assetco sell the assets to the Operating Lessor/SARS under an instalment sale
• Assetco finances the purchase with a loan from its holding company – Eagle Bonds
• Eagle Bonds finances the loan issuing 10 year, fully amortising, fixed rate Notes
listed on the Bond Exchange
• Exim Bank guarantees the Notes, resulting in efficient pricing
• Operating Lessor leases the assets to PPP under a 10 year, fixed rental, fully
repairing operating lease
• The operating lease rentals are no less than the amounts ultimately paid to
Noteholders
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Benefits of Eagle Bonds
• Ring-fenced SPV
• High gearing
• Low relative cost of funds
• Priced off US Government credit
• Rate set in an auction
• Non-utilisation of banking/normal debt lines
• Lower implementation cost than alternative ECA structures (many of the transaction costs ZAR-denominated)
• Capital markets documentation complete on the back of previous transactions
