Panama Canal gets $2.3bn for expansion project

14 October 2008 23:16  [Source: ICIS news]

HOUSTON (ICIS news)--The Panama Canal has lined up $2.3bn (€1.7bn) in financing for its $5.25bn expansion project from five agencies in Latin America, Europe and Asia, Panama President Martin Torrijos said on Tuesday.

Torrijos said in a ceremony that, in the midst of a global financial crisis, the canal funding shows that the financial agencies are reinforcing their confidence in Panama, according to a release from the Panama Canal Authority.

"This is the voice of the international community expressing solid support for a Panamanian project that will serve world commerce and international trade," Torrijos said.

The centrepiece of the project, which began in September 2007, will be a third set of locks allowing the canal to handle post-Panamax-sized ships carrying up to 12,000 shipping containers at a time, which cannot make it through the canal today.

The canal historically has provided a way for North American shippers to move cargo from the Atlantic to the Pacific ocean without going around South America, but to stay competitive for oil tankers and container ships from Europe, it now touts itself as a shortcut to Asia.

The financing will come from the European Investment Bank ($500m), Japan Bank for International Cooperation ($800m), Inter-American Development Bank ($400m), International Finance Corp ($300m) and Corporacion Andina de Fomento ($300m).

The remaining cost of the project will be financed through the canal's cash flow, the canal authority said.

The expansion began in September 2007 and is scheduled to be completed in time for the centenary of the canal's opening in 2014.

Recently, the Panama Canal Authority received its first-ever investment grade rating from Moody’s Investors Services, which gave the authority an A1 rating as a government-related issuer and a prospective A2 investment grade for financing expansion project.

($1 = €0.74)

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