Several of Sovereign's more notable transactions with commercial banks over the past several years include:
- The design of an innovative portfolio risk transfer program for one of our major commercial banking clients. The purpose of this 'multi-country, multi-borrower' facility was to create a cost-effective risk management tool for this bank allowing it to free up country lines and expand lending activities in key markets. After a careful analysis of the bank's asset portfolio, we were able to create an innovative structure that covers existing loans to borrowers in different industry sectors with various maturities, amortizing over 15 years. The portfolio consisted of eight countries, with country limits of $75 million per country. The bank was pleased to have achieved an administratively efficient and cost efficient way to purchase PRI. This 'multi-country, multi-borrower' facility also gives this bank the flexibility to add new loans as existing loans amortize out of the portfolio over time.
- A 5-year, $100 million currency inconvertibility and non-transfer policy protecting a British bank's interest in Certificates of Deposit issued by the State Bank of India;
- A 7-year, $95 million branch loan PRI policy for a German bank, used to support the bank's structured finance business in Brazil;
- A 7-year, $112.5 million PRI policy for a Dutch bank's loan to an electricity generation project in Guatemala;
- An 11.5-year, $40 million extended political risk policy for an Asian bank's loan to a power project in Sri Lanka. This transaction marked the first time in Asia in which a private PRI provider coinsured alongside the Asian Development Bank to provide political risk insurance coverage for a non-recourse project financing;
- A 10-year, $75 million extended political risk policy (part of a $577 million private political risk insurance market syndication) covering the financing of a power project in the Philippines.
- Sovereign led the private PRI syndication for the BLCP power project in Thailand (2003’s "Asia Power Deal of the Year"). We provided a syndicate of commercial lenders, led by ANZ, with $90 million in PRI capacity for a 15-year tenor. The $1.05 billion debt package for the BLCP project was the biggest non-recourse debt deal for a greenfield independent power project in Asia since the economic crisis of 1997. Sponsored by Banpu Coal and China Light & Power, the BLCP project is a 1,434-Megawatt, coal-fired power plant located in Map Tu Phut, Rayong province. Sovereign worked with ABN AMRO, BLCP’s financial advisors, and with two other private PRI underwriters, to successfully structure a $240 million PRI placement. The $240 million bridge facility enabled the commercial lenders to close the financing within the project’s Power Purchase Agreement deadline of October 2003 while allowing for the deferred accession of the ADB and JBIC/NEXI (the Japanese ECAs) in 2004. This arrangement also made it possible for the sponsor group to achieve a 50-50 ratio between Thai Baht financing and US Dollar financing.
(Click here for an explanation of Sovereign's relationships with Commercial Banks)
