1. U.S. - Spain Forum on transportation & housing finance
FINANCING TRANSPORTATION INFRASTRUCTURE IN SPAIN: SUCCESSFUL SCHEMES AND CASE STUDIES
U.S. - Spain Forum on transportation & housing finance
Washington, November 2002

2. Index I.- Caja Madrid: A Brief Overview
II.-Transportation Concessions in Spain: Successful Schemes
III.- Financing Transportation Projects
IV.- Case Studies: M-45 / R-2

3. I.- Caja Madrid:
A Brief Overview

4. Caja Madrid In Spain: The oldest bank (300 years)
2nd largest Savings Bank and 4th largest universal banking group (with assets aprox. € 66.7 Billion.)
Strongest market share in the Madrid Region: 16% (6% share of the Spanish market). Overall solid and profitable retail franchise
Sound core business. Low-risk business profile
Strong expansion, growth and diversification over the last five years

5. Today: Caja Madrid´s Business Structure
FOUNDATION
SOCIAL WELFARE
Comercial Banking
Investment Banking
Other Busineses
Retail
Treasury
Asset Management
Two Networks:
Capital Markets
E- business
- Madrid region
IFI´s
Venture Capital
- Periphery
Corporate Finance
Real Estate
SME´s
Industrial Portfolio
Bank Assurance
Real Estate developers
NH-AHORA
Private Banking

6. 2001 CONSOLIDATED HIGHLIGHTS & CREDIT RATINGS
Caja Madrid Group
2001 CONSOLIDATED HIGHLIGHTS & CREDIT RATINGS
(In Euro billion)
(In Euro million)
66.7
486
Bis Ratio
12,5%
437
63.2
50.6
373
Efficiency Ratio
46,4%
Coverage Ratio
245,2%
Bad Loans Ratio
0,68%
1999
2000
2001
1999
2000
2001
Attributable Profit
Total Assets
LONG TERM
AA-
Aa2 AA
SHORT TERM
A-1+
P-1
F1+

7. Mandated arranger name
Top mandated arrangers of European
project finance loans (October 2002)
Mandated arranger name
Loan Amt ($m)
Transactions
Share
1.-
Westdeutsche L. Girozentrale ,
2.-
Barclays Bank ,
3.-
Societé Generale
4.-
Royal Bank of Scotland
5.-
Bank of Scotland
6.-
Mizuho Corporate Bank
7.-
European Investment Bank
8.-
Caja Madrid
9.-
Intesa BCI
10.-
Abbey National plc
17.-
BSCH
18.-
BBVA

8. Loan Portfolio LOAN PORTFOLIO AS OF JUNE 02: € 2.351 billion
INDUSTRY BREAKDOWN
GEOGRAPHIC BREAKDOWN

9. Recent Infrastructure Financings
CLIENT / PROJECT
PROJECT DESCRIPTION
VOLUME (€ million)
ABRA TERMINALES MARÍTIMAS
Construction and Operation of containers terminal in Bilbao Harbour
69.5
ALAZOR INVERSIONES
Bridge financing for Madrid R3 and R5 roads
181
Construction and Operation of Estepona-Guadiaro toll road
AUSOL
150.2
INFRAESTRUCTURAS Y RADIALES
Construction and Operation of R-2 toll road and M-50 beltway road
424.0
INFRASPEED
High speed rail link between Amsterdam and Belgium border
1,200.0
GRANDE OPORTO
Shadow toll road (Portugal)
700
LUSOSCUT - AUTOESTRADAS DA COSTA DA PRATA
Mira - Oporto road (Portugal)
432.7

10. Recent Infrastructure Financings
CLIENT / PROJECT
PROJECT DESCRIPTION
VOLUME (€ million)
IBERPISTAS
Construction and Operation of A-6 Avila-Segovia toll road
300.0
NORSCUT, CONCESIONARIA DE AUTOESTRADAS
Viseu - Chaves road (Portugal)
697.0
LUSOSCUT, BEIRAS LITORAL E ALTA
IP-5 road (Portugal)
967.0
MEPSA
Barcelona Harbour chemicals pier
20.4
RUTA DE LOS PANTANOS
Madrid “Pantanos” road
70.1
SCUTVIAS, AUTOESTRADAS BEIRA INTERIOR
Abrantes - Guarda road (Portugal)
746.0
UTE ARCO SUR
GC-1 road in Gran Canaria
60.1

11. Recent Infrastructure Financings
CLIENT / PROJECT
PROJECT DESCRIPTION
VOLUME (€ million)
AUTEMA
Terrasa - Manresa road
160.0
CONCESIONES DEL ELQUI CONCESIONES DE LOS LAGOS
Los Vilos - La Serena toll road (Chile)
338.4
CONCESIONES DE MADRID
Madrid M-45 motorway
135.8
UTE CANALS AGULLENT
Canals - Agullent road
40.4
CINTRA
New investment financing
360.3
EUROTUNNEL
Channel Tunnel
343.0
ONTARIO OTR 407
Ontario 407 by pass
$C 3,200.0

12. Recent Infrastructure Financings
CLIENT / PROJECT
PROJECT DESCRIPTION
VOLUME (€ million)
UTE NUENO-HUESCA
Nueno-Huesca road financing
21.9
UTE SAN VICENTE
Cantábrico road financing
99.1
TRANSPORTES FERROVIARIOS DE MADRID
Madrid-Arganda suburban train
107.0
TAFIRA UTE
Tafira by pass
26.4
AUTEMA
Terrasa - Manresa road financing
72.0
AUSOL
Málaga-Estepona toll road
361.0
ARPEGIO-METRO DE MADRID
Expansion of Madrid´s underground system
261.4

13. II.-Transportation Concessions in Spain: Successful Schemes

14. General Considerations
Basic regulatory framework for private sector participation in infrastructure projects dates back to 1972 (Law 8/1972 establishes legal framework for the construction, operation and maintenance of roads under concession schemes)
Further developments since 1972 have provided a stable and reliable framework for investors and lenders
A bill currently under consideration will consolidate and strenghen the concession system
A key element is the strong support and involvement of the Spanish Administration

15. Goals of regulatory efforts
Assumption of key risks by private sector
- Construction
- Operation & maintenance
- Traffic
- Financing
Affordable tolls
Mobilisation of large amounts of private financing into infrastructure projects
Reallocation of Public Sector financing priorities

16. Successful Concesion Schemes
Shadow toll concessions
Real toll concessions

17. Common Features Strong government support, typically involving:
- Concession agreement whith government undertakings
- Maintenance of economic and financial equilibrium
- “Responsabilidad Patrimonial” (Compensation upon early termination of concession)
Specific terms (tenors of concessions, bidding criteria, maximun tolls, potential subsidies,etc) on a case-by-case basis
Maximun concession tenor of up to 75 years

18. Main Features of Shadow Toll Concessions
Granting authority (either central government or regional authorities) makes payments to the concession company according to the use of the road
Payments made by granting authority are not considered as public indebteness
Tipically, upside for investors is limited (reduction of toll payments upon achieving certain traffic volumes; reduction of concession tenor upon meeting certain returns, etc)
Traffic is more predictable
Lower traffic uncertainty may allow for more efficient financing schemes (bond financing and securitisation)

19. Main Features of Real Toll Concessions
Tolls payable by users
Higher traffic uncertainty
Typically, upside for investors is not limited
Financing structure typically more conservative

20. Toll Roads in Spain

21. III.- Financing Transportation Projects

22. Financing Transportation Projects
Up to date , infrastructure projects in Spain have been mostly funded by banks due to the competitiveness and flexibility of such financing:
- Willingness to provide long tenors
- Competitive pricing
- Consistent with high leverages
- Willingness to evaluate and assume traffic risk
Banks willingness reflect:
- Comfort with regulatory framework and strong involvement of the Administration
- Successful track record of toll road concessions
- Users acceptance of toll roads (annual ADT in toll roads has increased by 4,93% and 7,01% in the periods and , respectively)

23. Financing Transportation Projects
However, Capital Markets funding (Bond finanicng an securitisation) will become increasingly popular due to:
- Need of longer tenors
- Bank financing will not be enough to meet needs derived from the infrastructure plan
- Implications of BIS capital requirements on banks
- Regulatory support (Concession bill facilitates capital markets transactions)
Initially, “Wrap-Ups” from monolines will play a key role (Ex. Pamplona-Logroño toll road; Ruta de los Viñedos)

24. IV.- Case Studies:
M-45 / R-2

25. Radial 2 Toll Road
Part of a network of four access roads to Madrid from suburbs (high proportion of conmuting traffic).
Granting Authority
Ministerio de Fomento (Ministry of Public Works/Development)
Description
80,9 Km real toll road, from Guadalajara to the M-50, Madrid´s third untolled beltway. The R-2 will go parallel to the N-II, an untolled road connecting Madrid to Zaragoza and Barcelona. A key feature is the obligation to build, free of charge, a portion of the untolled M-50.

26. Radial 2 Toll Road Key Sponsors Dragados Group and Acciona Status
Under construction (expected commercial operation: 2nd half 2003); financial close in mid-2002
Concession Tenor
24 years
Tolls
Maximun levels established in concession agreement. Adjusted by inflation

27. Radial 2 Financing Structure
Total Project Cost
Approx. € 500 million
Debt/Equity
85/15. In Addition, a small contingent line of credit and equity has been committed to cover initial cash flow deficits
Debt/Tenor
21 years (Tenor may be reduced by one year if concession tenor is not extended by one year)
Average Life
16.6 years
Syndication
Led by Caja Madrid, with BBVA and Banesto as co-lead arrangers, and syndicated among 27 banks

28. M-45 Shadow Toll Road
Partial Beltway in Madrid, split into three tranches awarded to three different consortia
Granting Authority
Comunidad de Madrid (Madrid´s Regional Government)
Description
14,1 Km shadow toll road, from the N-II untolled road to Eje O´Donell (R3)
Key Sponsors
Acciona, Dragados Group, FCC

29. Original Conccesion Tenor
M-45 Shadow Toll Road
Status
In commercial operation since mid Financing closed in 2000.
Original Conccesion Tenor
25 years
Tolls
Payable by the granting authority according to usage. However, revenues in excess of a predeterminated annual level do not generate payments (i.e. the sponsors´ IRRs are capped

30. M-45 Financing Structure
Original Total Project Cost
Approx. € 131 million
Debt/Equity
85/15. In addition, a € 26 million contingent line of credit was committed to cover potential construction modifications requested by the granting authority
Debt/Tenor
22 years, back-ended amortizacion profile
DSCR
1.25 (minimum and average)
DEBT Participants
Banking tranche and EIB/EIF tranche, guaranteed by banks