President Martin Torrijos announced the financing structure for the final phase of the Panama Canal Expansion Program. The $2.3 billion dollar loan package (which will cover nearly half of the $5.25 billion dollar cost of the project) contains accepted bids from five multilateral agencies representing Asia, the Americas and Europe.

During his address at the presidential residence, called El Palacio de las Garzas, Torrijos stated that "It is the object of immense satisfaction for the entire nation - that in the midst of global uncertainty, multilateral agencies have reinforced their confidence in Panama. This is the voice of the international community expressing solid support for a Panamanian project that will serve world commerce and international trade."

The loan package is the result of months of extensive negotiations. The Panama Canal Authority (ACP) considered a total of $2.9 billion dollars in offers from multilateral organizations. The negotiated financing structure includes favorable provisions for the ACP including a 20-year amortizing period with a 10-year grace period. The average rate of the loans is 5.49% including base points.

ACP Administrator and Ceo Alberto Alemán Zubieta pointed out that the Panama Canal Expansion Program is the largest infrastructure project in Latin America and that its financing, in light of the global economic climate, "signifies complete trust and confidence in the solid finances and management of the ACP and the strength of the Panamanian economy."

Recently, the ACP received its first-ever prospective investment grade rating. Moody's Investors Services, one of the world's top credit rating agencies, gave the ACP an A1 as a government-related issuer, and a prospective A2 investment grade for the possible $2.3 billion financing for the expansion project - thus reaffirming Panama's growing presence in the global marketplace. In a teleconference shortly after the president's announcement, Alemán fielded questions from reporters around the world. Reuters, Latin Finance and other media all wanted to know the same thing: "Was the decision to go with multilateral agencies the result of the current economic crisis"

According to Aleman, offers from both commercial and multilateral agencies were considered, but the multilaterals simply offered with better rates. Bonds were never considered, he said. Some commercial money, however, is involved. Embedded in the $800 million financed by Japan Bank for International Cooperation (JBIC) are $400 million dollars from Tokyo commercial branches, guaranteed by JBIC.

Economic downturns are a consideration, said Aleman, but not a concern to the ACP. The Canal's fiscal year begins in October, and already the ACP has estimated a seven million ton decrease for 2009, from 310 to 303 million tons. "We are always keeping in mind that the Canal has run through many of these problems, these cycles" said Aleman. He cited the recessions of 1987 and 2001 as well as the late 90's Asia crisis, and added: "The Canal that serves the world has been through all these cycles and we will have to measure what the affect of this one will be."

The toll increases for the Panama Canal through the fiscal 2009 year were established in 2006. The ACP will announce any future per-ton toll increases this year.