China Eximbank provides $161.5 million buyer’s credit to Buenos Aires Metro Line A Equipment Project (Linked to Project ID#36979, #41096, and #54754)

On October 22, 2013, the City Legislature sanctioned Law No. 4,709 by which the capital investment for the acquisition of rolling stock for subway line A was declared of public interest and criticism, in order to ensure the correct provision of public service. Through this Law, the Executive Branch was authorized to contract a financial loan with The Export-Import Bank of China and/or with the Industrial and Commercial Bank of China and/or with China Development Bank for an amount of up to US$ 190 million ( or its equivalent in other currencies) to finance the provision of rolling stock for subway line A, with an amortization period of no less than three years, a one-year grace period, and a specific destination for financing said acquisition. Additionally, it was authorized to use Subway Fund resources to repay or guarantee the repayment of principal and interest, as well as those other amounts that are necessary for the sole purpose of complying with the financing contract. On August 15, 2014, the Government of the City of Buenos Aires signed a $161.5 million buyer's credit loan agreement (Contract No. 1410302032014210519) with the Export-Import Bank of China (China Eximbank) for the Buenos Aires Metro Line A Equipment Project. The proceeds of the loan were to be used by Subterráneos de Buenos Aires de Sociedad del Estado -- a company owned by the City of Buenos Aires -- to partially finance a commercial contract with CITIC Construction Co., Ltd. for for the purchase of 105 subway cars (to support Metro Line A in Buenos Aires). The loan originally carried the following borrowing terms: an interest rate of 6-month LIBOR plus a 3.8% margin, a 2% default (penalty) interest rate, a 3 year grace period (also the disbursement period), a 10 year maturity, a 0.1% management fee, and a 0.1% commitment fee. However, following an addendum in 2018 to extend the disbursement period, the grace period was subsequently extended to 3.83 years, with the maturity remaining unchanged (10 years). Sinosure provided credit insurance. Prior to the signing of the loan agreement, Subterráneos de Buenos Aires de Sociedad del Estado and CITIC Construction Co., Ltd. signed a contract on May 24, 2013 for the production, commissioning, spare parts for, and the maintenance of, the subway cars. A supplemental contract was signed July 31, 2013, worth $191,932,000. Subterráneos de Buenos Aires was responsible for paying CITIC Construction 14.85% of the contract cost as a down payment, while the remaining amount was to be funded through the buyer's credit loan from China Eximbank. The loan entered its disbursement period on October 30, 2015. The 2018 addendum to the loan agreement was drawn up due to project delays. The first disbursement for US$ 29.8 million was made on December 3, 2015. The second disbursement of U.S.$17.1 million was made on February 19, 2016. The loan had achieved a 51.4% disbursement rate ($83.1 million out of $161.5 million) as of June 30, 2018 and a 95.5% disbursement rate ($154.3 million out of $161.5 million) as of June 30, 2022. As of June 30, 2018, the loan's amount outstanding was $86.2 million. As of June 30th, 2021, four amortization installments were paid, and the balance as of that date of US$106.8 million. As of June 30, 2022, the borrower had paid six amortization (principal and interest) installments and the loan's (principal) amount outstanding was $83.1 million.

Additional details

1. The loan agreement can be accessed in its entirety via https://www.dropbox.com/sh/mqdfbbgsz3lhwiv/AABWLD-M2K80Os4jDs7QScP2a/US%24161%2C500%2C000%20Buyer%20Credit%20Loan%20Agreement%20with%20Subterraneos%20de%20Buenos%20Aires%202014.pdf?dl=0 2. AidData has estimated the all-in interest rate by adding 3.8% to average 6-month LIBOR (0.330%) in August 2014. 3. The disbursement and amount outstanding data are drawn from https://ws.bolsar.info/descarga/pdf/414755.pdf and https://documentosboletinoficial.buenosaires.gob.ar/publico/PE-RES-MEFGC-MEFGC-590-19-ANX.pdf

Number of official sources

10

Number of total sources

13