Scotia facilitates TGU US$600M bond

The fixed bond, which will reach final maturity in November 2027, is amortised with six equal, semi-annual instalments due leading to maturity; principal payments to begin in year nine. The bond, which does not have a government guarantee, was priced on October 27, 2016 and issued in New York in 144A/ Reg S market. Funding took place on November 4, 2016.

“On October 27, 2016, Scotiabank in a strategic partnership with TGU, and working alongside Credit Suisse, RBC Capital Markets and CIBC Capital Markets, successfully closed a Rule 144A / Regulation S Bond offering, raising US$600 million in the international capital markets.” Scotiabank said the deal facilitates a fast, non-recourse financing for the liquidation of the debt to The Government of Trinidad and Tobago for construction of the La Brea power plant.

“The Rule 144A / Regulation S Bond is a very unique type of financing and required the expertise of a local and international team that focused on professional standards and efficiency. The proceeds were ultimately used to refinance in full the company’s construction cost debt and facilitate the rationalisation of the company’s balance sheet and capital structure.” Scotiabank’s Senior Vice President and Head, Caribbean East and South, Anya Schnoor said, “This transaction is an affirmation of the breadth and strength of Scotiabank’s international footprint to expand the range of financing solutions available to our clients.” TGU Chairman David D’Andrade, also commented on the bond transaction.

“TGU is now poised to leverage opportunities for growth outside TT, earning valuable foreign exchange and providing more high quality jobs for our citizens,” D’Andrade stated.

Describing TGU as an important asset for the continued growth of TT, Scotiabank said the TGU business model saves millions of dollars in overall operating cost but particularly in fuel cost.

“By using less fuel for greater power output, the plant has a smaller carbon footprint when compared to simple cycle gas turbine plants. This is part of TGU’s tenyear strategy to bring power production in TT up to international standards of efficiency, cost and sustainability,” Scotiabank stated.

Ahead of the transaction, TGU obtained a BBB rating from S&P and a BBB - rating from Fitch, in which Scotiabank acted as rating agency advisor.

“Investor confidence was so high, the bond was oversubscribed by four times and peaked at approximately US $2.4 billion.” The deal benefited greatly from Caribbean investor demand, which was assisted by Scotiabank’s local distribution capabilities and institutional investor relationships.

Based on final allocations, North American investors received 49 percent of allocations, while the balance was allocated to Latin America and the Caribbean (33 percent), Europe (17 percent) and Asia (one percent