Cleary acts on Lima’s bond issue
Cleary Gottlieb has acted as advisor to BofA Securities Inc, as initial purchaser, in the issuance of S/1,250 million (approximately USD $332.2 million) of bonds issued under the securitisation programme originated by the Municipality of Lima.
These bonds are part of the same series of S/1,205 million (approximately US $320.2 million) bonds issued in December 2023 under the same programme. The offering was priced on 12 September and closed on 17 September.
The bonds are denominated in Peruvian soles but payable in US dollars, are cleared through the DTC system and are listed on the Singapore Exchange. The Municipality of Lima intends to use the proceeds of the bonds to finance the Municipality of Lima’s development programme, including various infrastructure projects.
The firm had advised BofA Securities Inc. on the establishment of the programme in December 2023, which was structured as a Peruvian securitisation scheme backed by cash flows from certain taxes of the Municipality of Lima. These cash flows were assigned to a Peruvian trust created by the Municipality of Lima and the trust issued bonds under the programme, which were sold to international investors under Rule 144A and Regulation S. In addition, the Municipality of Lima has extended a guarantee governed by Peruvian law to cover potential shortfalls in specific accounts of the trust, including the payment account and the debt service reserve account. Credicorp Capital Sociedad Titulizadora is acting as Peruvian trustee for the issuer.
This reopening demonstrates the success of this innovative securitisation programme, the first of its kind, which allows the issuer to access international markets through bonds governed by Peruvian law that are cleared through the DTC system and issued under a Peruvian securitisation regime.
Cleary’s team included partners Adam Brenneman (pictured left) and Deborah North (pictured right) and associates Ignacio Lagos, Tracy Pecher and Pedro Arango. Partner Matt Brigham and associates Victoria Ju and Julia Huang advised on US tax matters. All lawyers are based in New York.
