China Development Bank contributes to RMB 1 billion syndicated loan for 110 km Vientiane-Vang Vieng Section of China-Laos Expressway Project (Linked to Record ID#65216, #89430, #89429, #98837, #98838, #98845, and #98846)

Project narrative

In June 2018, a syndicate of Chinese state-owned banks (consisting of China Development Bank, the Yunnan Branch of the Postal Savings Bank of China, and Bank of Communications) issued a syndicated loan worth RMB 1 billion and a syndicated loan worth $63 million to Laos-China Joint Expressway Development (老中联合高速公路开发有限公 or 老中联合高速公路开发有限公司) — a special purpose vehicle (SPV) and joint venture of China Yunnan Construction and Investment Holding Group (a 95% ownership stake) and the Ministry of Planning and Investment of the Government of Laos (a 5% ownership stake) — for the 110 km Vientiane-Vang Vieng Section of the China-Laos Expressway Project. In parallel, the Yunnan Branch of China Eximbank issued an RMB 560 million loan and the Yunnan Branch of the Industrial and Commercial Bank of China (ICBC) issued a $200 million loan to Laos-China Joint Expressway Development for the 110 km Vientiane-Vang Vieng Section of the China-Laos Expressway Project. All of these loans reportedly carried short or medium length maturities to support the start-up phase of the project. Laos-China Joint Expressway Development was created on December 8, 2017, and it signed a 50-year concession agreement with the Government of Laos for the China-Laos Expressway Project (also known as the Vientiane-Boten Expressway) on April 4, 2018. Under the terms of the concession agreement, the SPV assumed responsibility for implementing the $1.3 billion China-Laos Expressway in four phases and on a Build-Operate-Transfer (BOT) basis. The 110 km Vientiane-Vang Vieng Section of the China-Laos Expressway was the first phase of the project. The 440 km China-Laos Expressway was designed to start in Vientiane and end at the Laos-China border town of Boten. Upon completion, it was expected to include six bridges, 402 culverts, seven interchanges, 11 separated interchanges, one tunnel, eight toll gates, three service areas, and two parking areas. The 110 km Vientiane-Vang Vieng (Vientiane-Vangvieng) section of the China-Laos Expressway was designed as a two-way four-lane road with a design speed of 80 km to 100 km per hour. It passed through a 679-meter-long tunnel at Phoupha Mountain and linked Sikeuth village in Naxaithong district to a tourist hotspot in Vang Vieng district. Upon completion, it was expected to shorten the Vientiane-Vang Vieng travel time from 3.5 hours to one hour. Yunnan Construction and Investment Holding Group (YCIH) was the contractor responsible for implementation of the Vientiane-Vang Vieng section. Construction began on December 30, 2018. The Vientiane-Vang Vieng section of the China-Laos Expressway was opened to traffic on December 20, 2020, approximately 13 months ahead of schedule. It reportedly created a significantly faster travel route than the alternative, 156 km route via Road No. 13 North. Then, on May 26, 2021, Laos-China Joint Expressway Development signed four separate, long-term loan agreements for the 110 km Vientiane-Vang Vieng Section of the China-Laos Expressway Project: an RMB 1,800,000,000 loan from the Yunnan Branch of China Development Bank that carries a 4.45% interest rate and a 29.6-year maturity (final maturity date: December 31, 2050); an RMB 938,060,000 loan from the Yunnan Branch of China Eximbank that carries a 2.7% interest rate and a 29.6-year maturity (final maturity date: December 31, 2050); an RMB 936,956,300 loan from the Yunnan Branch of China Eximbank that carries a 4.9% interest rate and a 29.6-year maturity (final maturity date: December 31, 2050); and an RMB 481,019,000 loan from the Yunnan Branch of China Development Bank that carries a 5.58% interest rate and a 29.6-year maturity (final maturity date: December 31, 2050). All four of these loans are supported by corporate repayment guarantees from China Yunnan Construction and Investment Holding Group and collateralized against a toll revenue pledge from Laos-China Joint Expressway Development. The estimated contributions of CDB, Bank of Communications, and PSBOC to the RMB 1 billion syndicated loan are captured via Record ID#64727, Record ID#98837, and Record ID#98838, respectively.