Chapter 11

Quezon Power, the Philippines

Type of project

440 MW pulverised-coal-fired power plant.

Country

The Philippines.

Distinctive features

• First private-sector generation facility selling power to a privately owned, unrated
  utility in a non-investment-grade emerging-market country.


• First large-scale independent power project in the Philippines to be financed, built,
  owned and operated by a private entity without the sovereign backing of the
  Philippine government.


• Longest term (25 years) of Power Purchase Agreement (PPA) with private counter-
  party in Asia.


• Longest term and thinnest spread for a power project financing in Southeast Asia.


• First project finance loan for Private Export Funding Corporation (PEFCO).


• First emerging-market project financing with a bond initially registered with the US
  Securities and Exchange Commission (SEC).
  (Previous deals that have begun with the issuance of unregistered Rule 144A bonds
  have later been refinanced with bonds registered with the SEC. The sale of Rule 144A
  bonds is limited to qualified institutional buyers. Upfront SEC registration allows
  immediate sale to a broader range of investors and minimises any possible illiquidity
  premium in bond pricing.)

Description of financing

The Quezon Power project was financed in 1997 with US$830 million of debt and equi-

ty, including fees payable to the Export–Import Bank of the United States (US

Eximbank) at project completion. The sponsors’ equity contribution was US$204.2 mil-

lion. The US$662.5 million bank financing comprised the following elements:

• US$405 million as a 60-month construction loan priced at 137.5 basis points (bps)
  over the London interbank offered rate (Libor) with principal and interest insured