Hyundai E&C’s Panama Metro Line 3 Project won the TXF Americas Export Finance Deal of the Year in 2022, recognized for its excellence in global finance. This is the second feat following LatinFinance’s Deals of the Year Award last February.
TXF(Trade Export Finance, U.K-based leading financial research institution) is an integrated financial media related to trade/export and commodities/supply chains established in London in 2013, and each year selects and announces 10 of the best deals in global financial markets.
Hyundai E&C Consortium, carrying out the Panama Metro Line 3 project, signed a mid-to long-term financial agreement in June last year to purchase a $2.7 billion “construction payment commitment.” This is an instrument in which financial institutions purchase from clients, export bonds issued by exporters on a non-recourse basis, to provide funds to exporters first, and recover the funds from client three to seven years later.
The agreement was selected as the deal of the year for the following reasons. It is the △first supplier credit deal involving Korean ECA(Export Credit Agency) including KEXIM and K-Sure, △participated by leading financial institutions from Asia, Europe, and the U.S. including Panama’s state bank, △ embedding Green Financing Facility in structured financing resulting in CO₂ emissions reductions.
Meanwhile, the Panama Metro Line 3 construction project is the largest infrastructure project initiated by the Panama government with a budget of $2.8 billion to build a total of 25km of elevated railways (monorail), 13 stations and one vehicle depot connecting Panama's capital, Panama City, and the western region of Arraiján. The project is expected to promote economic development thanks to improved transportation and logistics and reduced carbon dioxide emissions of 20,000 tons per year.
Hyundai E&C participated in the bidding as a consortium with Hyundai Engineering and POSCO E&C in 2019 and finally won the project in February 2020 by scoring the highest in all areas of technology, commercial and financial viability.
Prior to the bidding, KEXIM and K-Sure established a “mid to long-term export bond purchase mechanism” and were the first to support the Hyundai E&C consortium, which later became Team Korea. The mechanism, serving as the basis of this agreement, is a financial instrument commonly used in Latin America and was introduced to secure financial competitiveness of the Panama Metro Line 3 project and actively support the market expansion into Latin America in the future.
An official from Hyundai E&C said, "Korean ECAs’ new mid-to long-term export bond purchase mechanism has helped to successfully win Panama's largest infrastructure project and laid the foundation for Korean companies to improve their financial competitiveness in Latin American markets,” adding that, “Hyundai E&C will continue to utilize the mechanism to accelerate its entry into Latin American markets.”