What kind of debt (agency debt, bank debt, or Rule 144A bonds) should the sponsors use to fund the debt? What are the advantages and disadvantages of each kind of debt? They should go after Rule 144? bonds to fund the debt, since it has the share advantages of public bonds and has the additional advantage of speed, they also don’t require initial disclosure to the SEC and only qualified institutional investors could buy 144A bonds wich makes it a safer option. Advantages and Disadvantages of each kind of debt:

Public bond: provides more money than other means, with more maturity, but has a negative carry. Rule 144: Easy execution, short period of time, but they are dependent on the Venezuelan government and the U. S. market, wich makes it very volatile. Bank Debt: draw on the credit line as pleased, but it has variable interest rates and a short maturity. Agency Debt: No PRI needed on the loan, but the majority of the remaining debt would need the PRI. Will the bonds get an investment grade rating? How can they improve the probability of getting an investment grade?

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I believe they will get an investment grade rating because they have all the resources to make the project work, not only do they have technology expertise and know-how, but in the financial aspect as well. Actually they could develop the project by themselves, without the need of a partnership. I think that they could probably improve the probability by emphasizing that the company has solid financial backgrounds and that they could be a AAA company if it wasn’t for the country the company is settled in so now with the alliance with an American company the probabilities of failure are minimal.

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