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Korea Exim News

Korea Eximbank to Provide US$ 760 million for Panama Metro Line 3 Project with New Financial Instrument (Mid- to Long-term Export Bond Purchase)

  • Date2021.06.17
  • View956

□ The Export-Import Bank of Korea (www.koreaexim.go.kr, Chairman Bang, Moon-kyu, “Korea Eximbank“) announced on June 17 that it will provide $760 million by purchasing mid- to long-term export bonds for the Panama Metro Line 3 project awarded to a Korean consortium including Hyundai Engineering & Construction (E&C).

 

ㅇ If Panama Metro Corporation issues a payment guarantee according to the process rate, Korea Eximbank will purchase it at a discount and provide payment to Hyundai Engineering E&C and other Korean companies in advance.

 

ㅇ Such financial instrument is widely used for mid- to long-term infrastructure projects in Latin American countries such as Panama, Peru, and Colombia, and has the advantage of allowing contractors to collect construction costs at an early stage.

 

 

□ The Panama Metro Line 3 project is a large infrastructure project worth a total of $2.8 billion to build a 25-kilometer long overpass (Monorail), 13 stations and a vehicle base in Panama City, the capital of Panama.

 

 

□ In 2019, Hyundai E&C, POSCO E&C and Hyundai Engineering formed a consortium in a partnership, so called "Team Korea" and entered the bidding for this project.

 

ㅇ The Hyundai E&C-led consortium won the Panama Metro Line 3 project of Panama Metro Corporation, gaining the highest score in all categories including technology, commercial viability and financing in February 2020.

 

 

□ On its part, Korea Eximbank backed the consortium with its competitive financial scheme for the consortium's successful bid for the project in Panama.

 

 

□ To that end, Korea Eximbank issued a "Financial Support Letter," the most competitive financial condition offered by among the lender group, aiming to boost the competitiveness of the Hyundai E&C-led consortium in the bidding process.

 

 

□ Korea Eximbank will purchase $760 million worth of export bonds over the next five years to help the consortium collect construction costs early.

 

ㅇ More than 10 financial institutions, including Korea EximBank, Panama National Bank and International Commercial Bank, will participate in the project, with a total purchase amount of $2.7 billion.

 

 

□ "We expect that this newly introduced financing method of purchasing mid- to long-term export bonds will greatly help domestic companies win infrastructure projects in Latin America by boosting their financial competitiveness in the market, which has so far been dominated by Spanish and Chinese construction companies," said an official of Korea Eximbank.

 

 

□ Upon completion, the Panama Metro Line 3 project is expected to reduce carbon dioxide emissions by 20,000 tons per year, and will also contribute significantly to the Panama government's achievement of carbon neutrality targets by 2050.

 
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