The Municipality of Lima’s S/1.25 Billion Bond Offering

Cleary Gottlieb represented BofA Securities Inc., as initial purchaser, in the follow-on issuance of S/1.25 billion (approx. $332.2 million) of bonds issued under the securitization program originated by the Municipality of Lima.

These bonds constitute part of the same series of the S/1.205 billion (approx. $320.2 million) of bonds issued in December 2023 under the same program.

The offering priced on September 12, 2024, and closed on September 17, 2024.

Cleary had advised BofA Securities Inc. in the set-up of the program in December 2023, which was structured as a Peruvian securitization regime backstopped with the cashflows of certain taxes of the Municipality of Lima. These cashflows were assigned to a Peruvian trust created by the Municipality and the trust issued the bonds under the program, which were sold to international investors under Rule 144A and Regulation S. Additionally, the Municipality of Lima has extended a Peruvian law-governed guarantee to cover potential shortfalls in specific trust accounts, including the payment account and debt service reserve account. Credicorp Capital Sociedad Titulizadora S.A. is acting as Peruvian trustee of the issuer.

The bonds are denominated in Peruvian soles but payable in U.S. dollars, clear through the DTC system and are listed on the Singapore Stock Exchange. The Municipality of Lima intends to use the proceeds of the bonds to finance the Municipality’s development program, including several infrastructure projects.

This reopening evidences the success of the novel and first-of-its-kind securitization program, which allows the issuer to access the international markets through Peruvian law-governed bonds that clear through the DTC system issued under a Peruvian securitization regime.