Cleary and Lazo Abogados on first issuance of MML
Cleary Gottlieb has advised BofA Securities, as initial purchaser, and Lazo Abogados to the Metropolitan Municipality of Lima (MML), on the structuring of its originated securitisation programme for the issuance of up to S/4 billion (approx. US$1.08 billion) in bonds governed by Peruvian law and on the first issue of S/1.205 billion (approx. US$325.6 million) in bonds maturing in 2043.
The offering was priced on 19 December 2023 and closed on 27 December 2023.
The programme was established under a Peruvian securitisation regime backed by cash flows from certain MML taxes. These cash flows were assigned to a Peruvian trust created by MML. The bonds under the programme were issued by the Peruvian trust. In addition, MML has extended a guarantee governed by Peruvian law to cover possible 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.
The first series of bonds under the programme is denominated in Peruvian soles, but payable in US dollars. The bonds will be cleared through the DTC system and are expected to be listed on the Singapore Exchange.
MML intends to use most of the proceeds from the sale of the bonds to finance the Municipality’s development programme, including various infrastructure projects. The remainder will be used to prepay certain existing loans of the Municipality and to terminate an existing guarantee trust in relation thereto.
This is a first-of-its-kind and novel transaction, marking the first time that a soles-denominated bond issue has achieved such an extended term. It also positions MML as the first local government in history to carry out this type of transaction in the international capital market.
Cleary’s team included partners Adam Brenneman (pictured left) and Deborah North (pictured centre, left), associates Ignacio Lagos, Elizabeth Hamilton, and Tracy Pecher, and international lawyers Pedro Arango and Rafael Lulli. Partner Matthew Brigham, associate Victoria Ju, and law clerk Adam Girts advised on U.S. tax matters. Partner Michael Mazzuchi and associates Amber Phillips, Ben Rosenblum, and Emily Alfano advised on Investment Company Act matters. All lawyers are based in New York, except Michael Mazzuchi, Amber Phillips, and Ben Rosenblum who are based in Washington.
Lazo’s team was formed by partners Jorge Lazo (pictured centre, right), Luis Ernesto Marín (pictured right) and Michael Zavaleta.
