Mexico accepts, prices notes in tender offer for 15 dollar-denominated notes

By Rebecca Melvin

Concord, N.H., Jan. 5 – Mexico said it will accept, subject to proration and other terms, notes tendered in its offer to purchase for cash 15 series of its existing notes divided into two tranches up to a maximum purchase amount for each tranche, according to a news release.

The maximum purchase amount for tranche A is $603,673,000, and the maximum purchase amount for tranche B is $968,474,000.

As previously reported, the tender period began at 9:30 a.m. ET on Jan. 4 and will expire at noon ET on the same day for non-preferred tenders and at 2 p.m. ET on the same day for preferred tenders.

Tranche A notes

Mexico accepted for purchase the following tranche A notes:

• $47,823,000 tendered and accepted preferred tenders and $0 accepted of the $1.92 million non-preferred tenders of the $1,764,477,000 outstanding 3.6% global notes due 2025 (ISIN: US91087BAA89) at a price based on a 1.013% rate for the 1% U.S. Treasury securities due Dec. 15, 2024 and a fixed spread of 44 basis points, for a purchase price of $1,064.10;

• $17,669,000 tendered and accepted preferred tenders and $0 accepted of the $26.19 million non-preferred tenders of the $911,695,000 outstanding 3.9% global notes due 2025 (ISIN: US91087BAJ98) at a price based on a 1.013% Treasury for the 1% Treasuries due Dec. 15, 2024 and a fixed spread of 52 bps, for a purchase price of $1,074.13;

• $34,812,000 tendered and accepted preferred tenders and $0 accepted of the $66.82 million non-preferred tenders of the $2,094,668,000 outstanding 4 1/8% global notes due 2026 (ISIN: US91086QBG29) at a price based on a 1.362% rate for the 1.25% Treasuries due Dec. 31, 2026 and a fixed spread of 52 bps for a purchase price of $1,100.35;

• $114,308,000 tendered and accepted preferred tenders and $0 accepted of the $2,661,000 of the non-preferred tenders of the $2,489,158,000 outstanding 4.15% global notes due 2027 (ISIN: US91087BAC46) at a price based on a 1.362% rate for the 1.25% Treasuries due Dec. 31, 2026 and a fixed spread of 64 bps for a purchase price of $1,106.03;

• $74,666,000 tendered and accepted preferred tenders and $0 accepted of the $25,635,000 non-preferred tenders of the $1,953,068,000 outstanding 3¾% global notes due 2028 (ISIN: US91087BAE02) at a price based on a 1.362% rate for the 1.25% Treasuries due Dec. 31, 2026 and a fixed spread of 100 bps for a purchase price of $1,077.36;

• $314,395,000 tendered and accepted preferred tenders and $0 accepted of the $97,719,000 non-preferred tenders of the of the $3,400,038,000 outstanding 4½% global notes due 2029 (ISIN: US91087BAF76) at a price based on a 1.656% rate for the 1.375% Treasuries due Nov. 15, 2031 and a fixed spread of 114 bps for a purchase price of $1,111.66;

• $0 accepted of the $388,821,000 preferred tenders and $0 of the $26.14 million non-preferred tenders of the $2,259,237,000 outstanding 3¼% global notes due 2030 (ISIN: US91087BAH33) at a price based on a 1/626% rate for the 1.375% Treasuries due Nov. 15, 2031 and a fixed spread of 124 bps for a purchase price of $1,025.18; and

• $0 accepted of the $419,524,000 preferred tenders and $0 accepted of the $11.02 million non-preferred tenders of the $2,432,997,000 outstanding 4¾% global notes due 2032 (ISIN: US91087BAK61) at a price based on a 1.656% rate for the 1.375% Treasuries due Nov. 15, 2031 and a fixed spread of 161 bps for a purchase price of $1,126.32.

Tranche B notes

Mexico accepted for purchase the following tranche B notes:

• $216.13 million accepted of the preferred tenders with no non-preferred tenders of the $3,924,066,000 outstanding 4¾% global notes due 2044 (ISIN: US91086QBB32) at a price based on a 2.093% rate for the 2% Treasuries due Nov. 15, 2041 and a fixed spread of 210 bps for a purchase price of $1,079.84;

• $16,825,000 accepted preferred tenders and no non-preferred tenders of the $2,781,131,000 outstanding 5.55% global notes due 2045 (ISIN: US91086QBE70) at a price based on a 2.0093% rate for the 2% Treasuries due Nov. 15, 2041 and a fixed spread of 218 bps for a purchase price of $1,056.41;

• $191,783,000 accepted preferred tenders and no non-preferred tenders of the $2,540,913,000 outstanding 4.6% global notes due 2046 (ISIN: US91086QBF46) at a price based on a 2.074% rate for the 2% Treasuries due Aug. 15, 2051 and a fixed spread of 215 bps for a purchase price of $1,056.41;

• $0 accepted of the $144,643,000 preferred tenders and $0 non-preferred tenders of the $1,469,7463,000 outstanding 4.35%$global notes due 2047 (ISIN: US91087BAB62) at a price based on a 2.074% rate for the 2% Treasuries due Aug. 15, 2051 and a fixed spread of 212 bps for a hypothetical purchase price of $1,024.02;

• $306,626,000 accepted and tendered of the preferred tenders and $0 non-preferred tenders of the $2,317,415,000 outstanding 4.6% global notes due 2048 (ISIN: US91087BAD29) at a price based on a 2.075% rate for the 2% Treasuries due Aug. 15, 2051 and a fixed spread of 219 bps for a purchase price of $1,052.56;

• $237.11 million accepted and tendered of the preferred tenders and $0 accepted on the $1 million non-preferred tenders of the $2,521,359,000 outstanding 4½% global notes due 2050 (ISIN: US91087BAG59) at a price based on 2.074% for the 2% Treasuries due Aug. 15, 2051 and a fixed spread of 213 bps for a purchase price of $1,048.02; and

• $0 accepted of the $362,217,000 preferred tenders and $0 accepted of the $1.69 million non-preferred tenders of the $2.5 billion outstanding 5% global notes due 2051 (ISIN: US91087BAL45) at a price based on a 2.074% rate for the 2% Treasuries due Aug. 15, 2051 and a fixed spread of 218 bps for a purchase price of $1,123.14.

Offer details

Each hypothetical purchase price per $1,000 principal amount was calculated using the price of the applicable reference security at 4 p.m. ET on Jan. 3.

Holders will also receive accrued interest up to but excluding the settlement date, which is slated for Jan. 7.

On Tuesday, Mexico also sold $5,799,344,000 of notes in two parts.

The $2,868,146,000 tranche of 3.5% global notes due Feb. 12, 2034 priced at 99.456 to yield 3.556%, or a spread over Treasuries of 190 basis points and the $2,931,198,000 of 4.4% global notes due Feb. 12, 2052 priced at 99.606 to yield 4.424%, or a spread over Treasuries of 235 bps. The notes were talked at Treasuries plus 265 bps area yield.

About $668,146,000 of the 2034 new notes and $1,031,198,000 of the 2052 new notes are intended to fund the purchase of preferred tenders in the concurrent tender offer. The amount of new notes issued may be adjusted based on final acceptances in the tender offer.

The tender offer was conditioned on pricing of the new notes.

Mexico said it may, but is not required to, issue and sell new notes to holders who tender their old notes under the tender offer and place firm orders for new notes during the tender period.

If Mexico decides to issue and sell new notes to such holders, settlement for the new notes is expected to occur on Jan. 12.

With respect to the tranche A old notes, Mexico will give preference to tendering holders who concurrently submit an indication of interest for the purchase of new 2034 notes, and with respect to the tranche B old notes, Mexico will give preference to tendering holders who concurrently submit an indication of interest for the purchase of 2052 new notes.

For the 3.9% notes due 2025, 3¼% notes due 2030 and 4¾% notes due 2032, all part of tranche A, if the repurchase yield is less than the contractual annual rate of interest for a series, then the purchase price will be calculated based on the par call date for that series; and if that repurchase yield is higher than or equal to the contractual annual rate of interest for that series, then the purchase price will be calculated based on the applicable maturity date for that series. The par call date for the 3.9% notes is March 27, 2025. The par call date for the 3¼% notes is Jan. 16, 2030. And the par call date for the 4¾% notes is Jan. 27, 2032.

Pertaining to tranche B, if the repurchase yield is less than the contractual annual rate of interest for the 4½% notes due 2050 and the 5% notes due 2051, then the purchase price will be calculated based on the par call date for the notes, and if that repurchase yield is higher than or equal to the contractual annual rate of interest for that series, then the purchase price will be calculated based on the applicable maturity date for such series. The par call date for the 4½% notes is July 31, 2049, and the par call date for the 5% notes is Oct. 27, 2050.

Mexico may subject each series of old notes to different amounts of proration at its discretion.

The dealer managers for the tender offer are Barclays (800 438-3242, 212 528-7581), BBVA Securities Inc. (212 728-2446), BofA Securities Inc. (888 292-0070) and Santander Investment Securities Inc. (212 407 0930).

D.F. King & Co., Inc. (ums@dfking.com) is the information agent.

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