Instituto de Credito Oficial begins tender, exchange offers for notes

By Angela McDaniels

Tacoma, Wash., Oct. 11 – Instituto de Credito Oficial began a tender offer and an exchange offer for up to €500 million of its notes, according to a notice to bondholders.

The following notes are covered by the offers:

• €2,967,366,000 of outstanding 4.625% notes due Jan. 31, 2017;

• €1,943,147,000 of outstanding 4.875% notes due July 30, 2017;

• €2,694,552,000 of outstanding 4.125% notes due Sept. 28, 2017;

• €1,808,786,000 of outstanding 4.875% notes due Feb. 1, 2018;

• €1,232,677,000 of outstanding 4% notes due April 30, 2018;

• €2,283,509,000 of outstanding 4.375% notes due May 20, 2019;

• €1,252,047,000 of outstanding 4.75% notes due April 30, 2020; and

• €2.45 billion of outstanding 6% notes due March 8, 2021.

If the tender offer is oversubscribed, the company will accept non-competitive offers first, subject to possible proration, and competitive offers second.

The offers will end at 10 a.m. ET on Oct. 19, and the settlement date is expected to be Oct. 26.

The company reserves the right to increase or decrease the €500 million cap.

The company said it will determine at its discretion the allocation of the amount accepted for purchase in the tender offer and/or the amount accepted for exchange in the exchange offer. It will also determine how much of each series of notes to accept.

Tender offer pricing

Pricing will be determined at 5 a.m. ET on Oct. 20 by reference to the sum of the offer purchase spread specified or deemed specified by the relevant noteholder and the relevant reference benchmark yield for that series.

In the tender offer, the company will determine a minimum purchase spread for each series of notes through an unmodified Dutch auction procedure. The minimum purchase spread for a series of notes will not be higher than the maximum purchase spread for that series and will otherwise result in the highest purchase spread for that series that will allow the company to accept for purchase the relevant tender series acceptance amount.

The maximum purchase spread is 6 basis points for the 6% notes due 2021, 5 bps for the 4.75% notes due 2020 and 4 bps for each of the other series of notes.

The company said it will not accept for purchase any notes tendered at purchase spreads lower than the minimum purchase spread for the relevant series.

Holders will also receive accrued interest.

Exchange ratio

For each series of notes, the exchange ratio will be calculated by dividing the exchange price of that series by the new notes price.

The exchange price for each series will be determined on the pricing date by reference to the sum of the exchange spread of that series and the relevant reference benchmark yield for that series.

Holders will also receive accrued interest in cash.

New notes

The new notes will be denominated in euros.

The new notes’ coupon will be calculated by reference to the sum of the new notes spread, 7 bps, and the new notes reference benchmark rate.

The new notes price will be calculated by reference to the new notes yield.

The dealer managers are Banco Santander SA (44 207 756 6909, 44 207 756 6646, tommaso.grospietro@sandantergcb.com or king.cheung@sandantergcb.com), Credit Agricole CIB (44 207 214 5482 or liability.management@ca-cib.com) and Societe Generale (44 20 7676 7579 or liability.management@sgcib.com). The tender and exchange agent is Citibank, NA, London Branch (44 20 7508 3867 or exchange.gats@citi.com.

Instituto de Credito Oficial is a state-owned bank based in Madrid.

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