Argentina received a proposal to finance the conversion of the Sarmiento rail line to an underground service. An offer of 900mn euros (US$1.1bn) was made by a group comprising several European financial institutions, Argentina's transport ministry said in a press release.
The firms that made the proposal were the Italian agency of external credit SACE, Deutsche Bank, Intesa San Paoli and HSBC; the offer was driven by Italian company Ghella, which is part of the consortium that is currently in charge of the project.
The ministry highlighted that this offer "guarantees the financing" for the project, and also marks SACE's return to infrastructure financing in Argentina after 20 years.
With a US$2.9bn budget, the Sarmiento railway conversion is part of a US$14bn plan to overhaul the train network in the metropolitan area of capital Buenos Aires. The initiative is known as the regional express network (RER).
The RER is only one of several major infrastructure plans being developed by Mauricio Macri's government that has turned to foreign financing.
Moody's senior analyst and VP Daniela Cuan told BNamericas that the government "doesn't have the resources to finance these projects on its own," and the local capital market is rather limited; this leaves foreign financing as the most viable option.
"There are many projects to finance, and we will have to see where the resources will come from. This [financing agreement] is an example of what needs to be done," she said.
Cuan added that the government has taken measures to give more predictability to several sectors of the economy, which should support higher confidence from investors. Moody's has a positive outlook for Argentina, which Cuan says will also contribute to investor confidence.
Javiera Gracia - BN Americas