Hyundai Engineering & Construction Wins 'Deal of the Year' in Structured Finance Category by LatinFinance

Awarded 'Deal of the Year' by Leading Latin American Financial Media
Recognized for Successful Financial Agreement on Panama Metro Line 3 Project
Expecting Enhanced Financial Competitiveness of Korean Companies in Latin American Infrastructure Market

[Asia Economy Reporter Kangwook Cho] Hyundai Engineering & Construction announced on the 14th that it has won the Structured Finance Award in the ‘2021 Deal of the Year’ selected by the U.S. media LatinFinance, becoming the first Korean construction company to receive this honor.

LatinFinance is a leading media outlet covering the economy and financial markets of Latin America and the Caribbean, founded in 1988 in New York and Miami, USA. Every year, it selects and announces landmark deals made in the capital markets of Latin America and the Caribbean region.

Hyundai Engineering & Construction received this award for the $2 billion long-term financing agreement signed in July last year related to the Panama Metro Line 3 project. LatinFinance cited the following reasons for the award: △ it was the largest deal in the history of Panama’s infrastructure projects △ it was a structured finance deal involving capable financial institutions from Asia, Europe, and the United States △ the social and environmental impacts of the project on Panama were key factors in the evaluation.

The Panama Metro Line 3 construction project is the largest infrastructure project by the Panama government, with a total budget of $2.8 billion to build a 25 km elevated railway (monorail), 13 stations, and one vehicle depot connecting Panama City, the capital of Panama, and the western Arraijan area. The project is expected to alleviate the rapidly increasing local traffic congestion and reduce approximately 20,000 tons of annual carbon dioxide emissions.

In 2019, Hyundai Engineering & Construction formed a consortium with POSCO Engineering & Construction and Hyundai Engineering to bid for the project, ultimately winning the contract in February 2020 by achieving the highest scores in technical, commercial, and financial evaluations. To enhance financial competitiveness for winning the project, the Export-Import Bank of Korea and Korea Trade Insurance Corporation established a ‘long-term export receivables purchase’ system and supported the Hyundai Engineering & Construction consortium for the first time, forming ‘Team Korea.’ The long-term export receivables purchase system actively supports Korean companies’ entry into Latin America by purchasing export receivables issued by the ordering party to exporters under ‘non-recourse’ conditions, providing funds to exporters, and recovering the funds from the ordering party after 3 to 7 years. The non-recourse condition means that the financial institution purchasing the export receivables does not request repayment from the exporter in case of the importer’s payment default. Subsequently, on July 29 last year, a $2 billion long-term financing agreement was signed to purchase a ‘construction payment guarantee’ worth $2.7 billion over 9 years, involving more than 10 global banks including Panama’s national policy bank.

A Hyundai Engineering & Construction official stated, "With the establishment of the ‘long-term export receivables purchase’ system by Korean ECA institutions, domestic companies will have a foundation to enhance financial competitiveness for projects based on financial structures commonly used in the Latin American market." He added, "We will actively utilize this system to ensure stable project execution for similar projects in the future and accelerate our efforts to penetrate the Latin American market."

This content was produced with the assistance of AI translation services.