Chapter 10

CBK, the Philippines

Project summary^1

The CBK project entails a 25-year build, rehabilitate, operate and transfer (BROT) contract
for the rehabilitation and upgrading of three Philippine hydroelectric power stations –

Type of project

Rehabilitation and expansion of hydroelectric power plant and pumped storage facility.

Country

The Philippines.

Distinctive features

• Largest private, political-risk-covered project financing ever completed.


• First syndicated project financing for a sub-investment-grade country after Asian
  financial crisis.


• Syndication accomplished at a time when market conditions for the Philippines
  were deteriorating because of economic and political uncertainty.

Description of financing

The total project cost of approximately US$488 million was financed in 2000 by:

•a US$351 million 12.5-year term loan at 215 basis points (bps) over the London

interbank offered rate (Libor), covered by private political risk insurance priced at

175 bps for the relevant principal amount plus six months of applicable interest

cover; and

• US$137 million of equity.

The debt financing package also includes:

• US$20 million as an uncovered 6.5-year revolving credit debt service reserve facil-
  ity at 300 bps over Libor; and


• US$12 million as an uncovered 4.5-year performance security facility at 350 bps
  over Libor.