[aegap]

Originally Posted by Andy B

The government may be lying but they are not the one's building the highway. It's being built with private money by a private company in return for collecting the tolls for some 30 years. However, knowing politics in the DR, it will probably be finished and open just before the presidential election in May, 2008.

(the rain storm earlier in the hurricane season has pushed the opening date back around what was orignally projected)

DR1
Autopistas del Nordeste – Expect Early Completion – Additional Project in the Pipeline
Our meeting with Autopistas del Nordeste (AdN) was very encouraging and featured some interesting updates. AdN is responsible for constructing a 106-km toll road between Santo Domingo and the peninsula of Samaná under a 33-year concession granted by the Dominican government. The primary source of funds for the project is toll revenue collected at two toll plazas near the north and south ends of the highway, and there is also a minimum revenue guarantee from the government in case toll revenues fall below a certain level. Project construction is funded in part by the US$163 million 20-year 9.3825% bonds issued in February of last year. The bonds have several sweeteners attached, including a partial guarantee from the World Bank’s Multilateral Investment Guarantee Agency (MIGA) which covers 51% of the face value of any loss attributable to specific factors including civil disturbance and breach of contract.

We were pleased to hear from management that the project is moving ahead of schedule and the company expects that construction will be finished three months early (January 2008 vs. May as originally projected). Additionally, tourism-based development in the northern end of the highway in Samaná is expected to spur an increase of traffic flows on the highway, and therefore higher revenues. Finally, we expect that AdN will be contracted to upgrade and develop an additional section of highway – this is just awaiting governmental approval, expected in the first or second week of March [2006). The cost of the additional project is expected to be around US$60 million. Final financing plans have not been drawn up yet, pending final adjudication of the new additional project. While intricately linked with the Dominican economy (traffic on toll roads tends to be highly correlated to GDP), AdN’s notes continue trading about 200 bps wide of the sovereign, leading us to continue viewing them as an excellent proxy.