Spain’s ICO tenders for six series, offers new 4.75% notes in exchange

By Susanna Moon

Chicago, June 7 – Instituto de Credito Oficial, a state-owned corporate entity of Spain, began tendering for several note series and is also offering to exchange them for newly issued euro-denominated 4.75% notes due April 2020.

The company is offering to buy or exchange up to €500 million pricing amount of the notes, according to an announcement.

For the tender offer, pricing will be set using an unmodified Dutch auction at 5 a.m. ET on June 15 using a reference security plus a maximum fixed spread.

The offers will end at 10 a.m. ET on June 14, with settlement planned for June 22.

The group 1 notes are as follows:

• €2,875,964,000 of outstanding €2.95 billion 4.125% notes due Sept. 28, 2017 with pricing using the Sept. 28, 2017 benchmark rate and a maximum spread of 5 basis points;

• €1,844,676,000 of outstanding €1,875,000,000 4.875% notes due Feb. 1, 2018 with pricing using the Feb. 1, 2018 benchmark rate and a maximum spread of 5 bps; and

• €2,337,979,000 of outstanding €2.4 million 4.375% notes due May 20, 2019 with pricing using the May 20, 2019 benchmark rate and a maximum spread of 5 bps.

For the tender offers, priority will be given first to non-competitive instructions for the group 1 series up to the tender acceptance amount and then to competitive instructions for the group 1 notes up to the tender acceptance amount less the amount of non-competitive tenders.

As for the exchange, priority will go to instructions up to the exchange acceptance amount.

The group 2 series are as follows:

• €3,193,796,000 of outstanding €3.35 billion 4.625% notes due Jan. 31, 2017 with pricing using Jan. 31, 2017 benchmark rate and a maximum spread of 6 bps;

• €2,598,221,000 of outstanding €2,598,221,000 4.875% notes due July 30, 2017 with pricing using July 30, 2017 benchmark rate and a maximum spread of 6 bps; and

• €1,309,447,000 of outstanding €1.35 billion 4% notes due April 30, 2018 with pricing using April 30, 2018 benchmark rate and a maximum spread of 6 bps.

For the group 2 tender offers, the issuer will accept non-competitive tenders up to the tender acceptance amount less the amount of non-competitive instructions for the group 1 series notes accepted for purchase and then for exchange, instructions for the group 2 notes up to the exchange amount accepted less the amount of instructions for the group 1 notes accepted for exchange.

The issuer said that it will accept notes tendered under non-competitive instructions for group 1 notes ahead of non-competitive instructions for group 2 notes and of any competitive tenders.

For the exchange, group 1 notes will be accepted before group 2 notes.

The new notes spread will be 8 bps over the new notes reference benchmark rate.

The offers are being made as part of ICO’s balance sheet management and are aimed at proactively managing the company’s forthcoming debt maturities. The offers are intended to provide some liquidity to noteholders.

ICO said it expects the offers to have a “positive impact on its capital structure, with the objective of enhancing the levels of ICO’s capital provisioning and, in particular, its solvency position.”

Madrid-based ICO plans to accept tenders for purchase or for exchange up to €500 million principal amount of the notes but reserves the right to accept significantly less than or more than that amount.

Banco Bilbao Vizcaya Argentaria, SA (+44 207 648 7516, fax +44 207 397 6094 or liabilitymanagement@bbva.com), HSBC Bank plc (+44 20 7992 6237 or liability.management@hsbcib.com) and Societe Generale (+44 20 7676 7579 or liability.management@sgcib.com) are the dealer managers.

Lucid Issuer Services Ltd. (+44 (0)20 7704 0880 Attention: David Shilson, or ico@lucid-is.com) is the tender and exchange agent.

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