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The issuer of a 1997 transaction backed by Panamanian toll-road receivables failed to make its scheduled principal and interest payments earlier this month - and the default has three big-name market players scrambling to restructure their investments in the deal.
John Hancock Life, Credit Suisse First Boston and Loomis Sayles & Co. hold the lion's share of the $126.5 million of bonds still outstanding from Pycsa Panama's offering, which is backed by tolls that drivers pay to use the Madden Segment and Northern Corridor highways near Panama City. Pycsa was unable to distribute some $7.8 million of payments due on June 15, a few weeks after the issuer started negotiating with bondholders to establish a restructuring plan that would allow them to recoup their investments.
The engineering and construction outfit, based in Mexico, is presenting investors with a pair of options. It could extend the bonds' maturities while lowering their coupon rates - giving investors the same returns they expected when they bought the securities, but over a longer period. However, a more-likely scenario would involve the construction of a $94 million extension connecting the northern...