By Susanna Moon
Chicago, Aug. 9 - Mexico said it priced the exchange offer for 15 series of notes by modified Dutch auction, setting the U.S. Treasury benchmark rate, the old bond exchange value, the exchange ratio and the reopened note exchange value for each exchange combination at 5 p.m. ET on Aug. 8.
As previously noted, holders of the group A bonds listed below are being offered reopened 3 5/8% global notes due 2022, reopened 4¾% global notes due 2044 or reopened 5¾% global notes due 2110 and, if Mexico decides to pay an additional amount, a dollar amount of cash.
The relevant U.S. Treasury bond is the 1¾% Treasury due May 15, 2022 in the case of old bonds being exchanged for reopened 2022 notes and the 3% Treasury due May 15, 2042 in the case of old bonds being exchanged for reopened 2044 notes or reopened 2110 notes.
The benchmark rate is 1.65% for the 1¾% Treasury due May 15, 2022 and 2.75% for the 3% Treasury due May 15, 2042.
The benchmark spread is 0.87% for the reopened 2022 notes, 1.18% for the reopened 2044 notes and 1.92% for the reopened 2110 notes.
In the case of old bonds being exchanged for reopened 2022 notes, the benchmark spread means the spread of the outstanding 2022 notes over the relevant U.S. Treasury benchmark rate. In the case of old bonds being exchanged for reopened 2044 notes or reopened 2110 notes, it means the spread of the outstanding 2044 notes or 2110 notes, as applicable, over the relevant U.S. Treasury benchmark rate.
Holders of the group B bonds are being offered reopened 2044 notes or reopened 2110 notes and, in some cases, a dollar amount of cash.
The bonds are noted in the tables below, along with the relative spreads in basis points for exchange into each series of reopened notes.
The exchange offers began Aug. 3 and will end at 5 p.m. ET on Aug. 9. Settlement is set for Aug. 20.
Pricing details
The reopened note exchange value is $1,109.04 for the reopened 2022 notes, $1,168.89 for the reopened 2044 notes and $1,249.14 for the reopened 2110 notes.
For the exchange into reopened 2022 notes, the old bond exchange value per $1,000 principal amount of old global bonds and exchange ratio for each combination is as follows:
• For the 6 3/8% notes due 2013, $1,030.83 per $1,000 of notes with an exchange ratio of 0.92948;
• For the 5 7/8% notes due 2014 ("January 2014 notes"), $1,073.58 with exchange ratio of 0.96803;
• For the 5 7/8% notes due 2014 ("February 2014 notes"), $1,072.64 with exchange ratio of 0.96718;
• For the 6 5/8% notes due 2015, $1,164.49 with exchange ratio of 1.05000;
• For the 11 3/8% bonds due 2016, $1,437.86 with exchange ratio of 1.29649; and
• For the 5 5/8% notes due 2017, $1,178.70 with exchange ratio of 1.06281.
For the exchange into reopened 2044 bonds, the old bond exchange value per $1,000 principal amount of old global bonds and exchange ratio for each combination is as follows:
• For the 6 3/8% notes due 2013, $1,030.75 with exchange ratio of 0.88182;
• For the 5 7/8% notes due 2014, $1,073.29 with exchange ratio of 0.91821;
• For the 5 7/8% notes due 2014, $1,072.33 with exchange ratio of 0.91739;
• For the 6 5/8% notes due 2015, $1,163.95 with exchange ratio of 0.99577;
• For the 11 3/8% bonds due 2016, $1,436.90 with exchange ratio of 1.22929;
• For the 5 5/8% notes due 2017, $1,177.77 with exchange ratio of 1.00760;
• For the 5.95% notes due 2019, $1,264.58 with exchange ratio of 1.08186;
• For the 8 1/8% bonds due 2019, $1,418.52 with exchange ratio of 1.21356;
• For the 5 1/8% notes due 2020, $1,206.04 with exchange ratio of 1.03178;
• For the 8% notes due 2022, $1,509.13 with exchange ratio of 1.29108;
• For the 11½% bonds due 2026, $1,924.99 with exchange ratio of 1.64685;
• For the 8.3% notes due 2031, $1,643.57 with exchange ratio of 1.40609;
• For the 7½% notes due 2033, $1,570.52 with exchange ratio of 1.34360;
• For the 6¾% notes due 2034, $1,476.76 with exchange ratio of 1.26339; and
• For the 6.05% notes due 2040, $1,110.18 with exchange ratio of 0.94977.
In the case of an exchange of 6.05% notes for reopened 2044 notes, there will be a base cash component of $250 for each $1,000 principal amount of notes accepted for exchange, according to a government press release.
For the exchange into reopened 2110 bonds, the old bond exchange value per $1,000 principal amount of old global bonds and exchange ratio for each combination is as follows:
• For the 6 3/8% notes due 2013, $1,031.04 with exchange ratio of 0.82540;
• For the 5 7/8% notes due 2014, $1,075.04 with exchange ratio of 0.86062;
• For the 5 7/8% notes due 2014, $1,074.04 with exchange ratio of 0.85982;
• For the 6 5/8% notes due 2015, $1,165.03 with exchange ratio of 0.93267;
• For the 11 3/8% bonds due 2016, $1,436.90 with exchange ratio of 1.15031;
• For the 5 5/8% notes due 2017, $1,180.57 with exchange ratio of 0.94511;
• For the 5.95% Global Notes due 2019, $1,265.97 with exchange ratio of 1.01347;
• For the 8 1/8% bonds due 2019, $1,419.35 with exchange ratio of 1.13626;
• For the 5 1/8% notes due 2020, $1,207.56 with exchange ratio of 0.96671;
• For the 8% notes due 2022, $1,508.01 with exchange ratio of 1.20724;
• For the 11½% bonds due 2026, $1,921.64 with exchange ratio of 1.53837;
• For the 8.3% notes due 2031, $1,639.75 with exchange ratio of 1.31270;
• For the 7½% notes due 2033, $1,566.67 with exchange ratio of 1.25420;
• For the 6¾% notes due 2034, $1,472.91 with exchange ratio of 1.17914; and
• For the 6.05% notes due 2040, $1,374.77 with exchange ratio of 1.10057.
Exchange amount calculation
In exchange for each $1,000 principal amount of old bonds exchanged, holders will receive
• A principal amount of reopened notes equal to the product of (a) $1,000 and (b) the applicable exchange ratio, which is the old bond exchange value divided by the reopened note exchange value. The total principal amount of the reopened notes to be issued to the holder will be rounded down to the nearest $2,000;
• If the holder is exchanging 2040 notes for reopened 2044 notes, the base cash component of $250 for each $1,000 principal amount of 2040 notes accepted for exchange. The base cash component will be deducted from the old bond exchange value for the 2040 notes when calculating the exchange ratio.
Mexico said the purpose of the base cash component is to ensure that all reopened notes will be fungible for U.S. tax purposes. It reserves the right to modify the base cash component prior to 6 p.m. ET on the business day prior to the expiration date;
• If Mexico accepts competitive offers for the applicable combination, a cash payment, referred to as the "clearing cash payment"; and
• A payment in cash for any principal amount of notes not issued as a result of rounding.
Holders will not receive any accrued interest on their old bonds accepted for exchange. Holders will also not be required to pay an amount equal to the interest accrued since the last interest payment date on the reopened notes issued to them. These amounts have been incorporated into and form part of the calculation of the exchange ratio.
The old bond exchange value will be (a) a price per $1,000 principal amount of old bonds intended to result in a yield to maturity of that series of old bonds on the settlement date equal to the sum of the relevant U.S. Treasury benchmark rate plus the relevant benchmark spread minus the relative spread for the relevant combination plus (b) the amount of interest accrued on each $1,000 principal amount of old bonds up to but excluding the settlement date minus (c) in the case of an exchange of 2040 notes for reopened 2044 notes, the base cash component.
The relative spreads are those noted in the tables below.
The reopened note exchange value for each series of reopened notes will be the sum of (a) a price per $1,000 principal amount of reopened notes intended to result in a yield to maturity equal to the sum of the relevant U.S. Treasury benchmark rate plus the relevant benchmark spread plus (b) the amount of interest accrued on the corresponding outstanding 2022 notes, 2044 notes or 2110 notes during the period from the most recent interest payment date up to but excluding the settlement date.
Clearing cash payment
The clearing cash payment for each combination will be an amount determined by Mexico under a separate modified Dutch auction. The minimum clearing cash payment is zero.
Each offer price for the old bonds must be expressed in increments of $0.01 with a minimum offer price of $0.01.
Each offer may be either a competitive offer, which specifies the cash payment (the "offer price") that the holder is willing to accept as the clearing cash payment, or a non-competitive offer.
The dealer managers are Bank of America Merrill Lynch (888 292-0070 or 646 855-3401), Credit Suisse Securities (USA) LLC (800 820-1653, 212 538-2147 or 44 20 7883 8763/7161) and Goldman Sachs & Co. (800 828-3182 or 212 902-5183). The information and exchange agent is bondholder Communications Group (212 809-2663, msantos@bondcom.com or 44 20 7382 4580).
Bondholders located or residing outside the United States may not participate unless they confirm their status as qualified investors or that they meet other eligibility standards.
Mexico exchange offer
Group A global bonds
| Bonds | Outstanding amount | 2022 notes spread | 2044 notes | 2013 notes spread
|
| 6 | 3/8% notes due 2013 | $1,168,414,000 | 227 bps | 366 bps | 447 bps
|
| 5 | 7/8% notes due 2014 | $1,291,108,000 | 153 bps | 292 bps | 378 bps
|
| ("January 2014 notes")
|
| 5 | 7/8% notes due 2014 | $1.49 billion | 153 bps | 292 bps | 377 bps
|
| ("February 2014 notes")
|
| 6 | 5/8% notes due 2015 | $1,343,649,000 | 127 bps | 266 bps | 344 bps
|
| 11 | 3/8% bonds due 2016 | $1,681,197,000 | 103 bps | 242 bps | 316 bps
|
| 5 | 5/8% notes due 2017 | $3.5 billion | 98 bps | 237 bps | 317 bps
|
|
|
| Group B global bonds
|
| Bonds | Outstanding amount | 2044 notes spread | 2110 notes spread
|
| 5.95% notes due 2019 | $2,928,103,000 | 189 bps | 265 bps
|
| 8 | 1/8% bonds due 2019 | $1,352,366,000 | 181 bps | 256 bps
|
| 5 | 1/8% notes due 2020 | $3 billion | 176 bps | 252 bps
|
| 8% notes due 2022 | $714,348,000 | 133 bps | 206 bps
|
| 11½% bonds due 2026 | $338.58 million | 60 bps | 132 bps
|
| 8.3% notes due 2031 | $1,626,187,000 | 33 bps | 105 bps
|
| 7½% notes due 2033 | $1,105,207,000 | 22 bps | 94 bps
|
| 6¾% notes due 2034 | $3,261,044,000 | 19 bps | 91 bps
|
| 6.05% notes due 2040 | $4.25 billion | 0 bps | 81 bps
|
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