Hungary begins cash tender offers for up to $750 million of 2023, 2024 notes

By Marisa Wong

Los Angeles, Jan. 4 – Hungary announced invitations to holders of its $2 billion 5¾% notes due 2023 (ISIN: US445545AJ57), of which $1,151,760,000 is outstanding, and $2 billion 5 3/8% notes due 2024 (ISIN: US445545AL04), of which $1,642,972,000 is outstanding, to tender their notes for purchase for cash.

The issuer is offering to purchase an aggregate principal amount of $750 million under the offers. The offer cap may be increased or decreased at the issuer’s discretion.

The purchase price for each series will be based on a benchmark security rate plus a clearing spread to be determined under a modified Dutch auction procedure. The maximum purchase spread is 20 basis points for both series. The benchmark security for the 2023 notes is the ¼% U.S. Treasury due November 2023, and the benchmark security for the 2024 notes is the 2¼% U.S. Treasury due March 2024.

The issuer will also pay accrued interest for tendered notes accepted for purchase.

The issuer will determine the allocation of the principal amount of notes accepted for purchase between the 2023 notes and 2024 notes at its discretion and reserves the right to accept significantly more or less (or none) of the notes of one series as compared to the other series.

Tendered notes may be subject to proration. In the event where both the 2023 notes and 2024 notes are accepted on a pro rata basis, there may be a different scaling factor for each series.

The issuer intends to accept for purchase tendered notes of a series as follows: first, all notes of that series tendered under non-competitive tender instructions in full; second, all notes of that series tendered under competitive tender instructions for which the purchase spread is greater than the relevant clearing spread; and third, all notes of that series tendered at the relevant clearing spread on a pro rata basis such that the aggregate principal amount of notes of that series accepted for purchase does not exceed the relevant series acceptance amount. The issuer will not accept any notes tendered for purchase at a purchase spread below the relevant clearing spread.

Tender instructions are due by 5 p.m. ET on Jan. 10.

Indicative series acceptance amounts will be announced at or around 5 a.m. ET on Jan. 11.

Pricing will be determined at or around 7 a.m. ET on Jan. 11. Results will be announced soon after pricing.

The settlement date is expected to be Jan. 13.

The tender offers are subject to a new financing condition. Hungary announced on Wednesday plans to issue new dollar-denominated notes.

BNP Paribas (+33 1 55 77 78 94; liability.management@bnpparibas.com), Citigroup Global Markets Europe AG (+44 20 7986 8969; liabilitymanagement.europe@citi.com), Deutsche Bank AG (+44 20 7545 8011), Goldman Sachs Bank Europe SE (+44 20 7774 4836; liabilitymanagement.eu@gs.com) and J.P. Morgan SE (+44 20 7134 2468; em_europe_lm@jpmorgan.com) are the dealer managers.

Kroll Issuer Services Ltd. (+44 20 7704 0880; attn.: Illia Vyshenskyi; hungary@is.kroll.com; https://deals.is.kroll.com/hungary) is information and tender agent.

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