Panama gets tenders for $549.17 million of 9 5/8%, 9 3/8% bonds in exchange offer

By Angela McDaniels

Tacoma, Wash., June 9 - The Republic of Panama received tenders for $262.31 million of its 9 5/8% global bonds due 2011 and $286.86 million of its 9 3/8% global bonds due 2012 during a one-day exchange offer held June 3, according to a news release.

Holders who exchanged will receive newly issued 9 3/8% dollar-denominated global bonds due 2029, which were first issued in 2006.

Panama said the amount of new 9 3/8% bonds delivered will equal the accepted amounts of old bonds multiplied by the repurchase price divided by the reopening price.

The repurchase prices are:

• 115.432 for the 9 5/8% bonds, which was determined based on the yield of the 2 5/8% U.S Treasury notes due May 31, 2010 and 107 basis points; and

• 119.624 for the 9 3/8% bonds, which was determined based on the yield of the 3½% U.S. Treasury notes due May 31, 2013 and 94 bps.

The reopening price for the new 9 3/8% bonds is 135.205, which was determined based on the yield of the 4 3/8% U.S. Treasury notes due Feb. 15, 2038 and 168 bps.

In total, $477.58 million of new 9 3/8% bonds will be issued under the exchange offer. They will be delivered on Wednesday.

When the offer was announced on June 2, Panama said it anticipated that exchanging holders will receive less principal amount of new 9 3/8% bonds than old bonds tendered.

In addition to the new 9 3/8% bonds, holders will receive a net cash payment equal to the accrued interest on the old bonds less accrued interest on the new 9 3/8% bonds since their last interest payment date on April 1 plus cash in lieu of rounding down because the new 9 3/8% bonds can only be delivered in multiples of $1,000.

Panama said the new 9 3/8% bonds will be listed on the Luxembourg Stock Exchange and will trade on the Euro MTF Market.

Before the offer began, there were $500 million of the 9 3/8% bonds due 2029 outstanding, and Panama said it would issue a maximum of $500 million of these bonds under the exchange offer.

Following the exchange, $322.3 million of the 9 5/8% bonds and $213.15 million of the 9 3/8% bonds will remain outstanding.

Concurrently with the exchange offer, Panama was offering up to $235 million of its 7¼% dollar-denominated global bonds due 2015.

Global Bondholder Services Corp. (212 430-3774 for banks and brokers or 866 873-5600) was the information agent. Citibank, NA (44 20 7508 3866 or exchange.gats@citigroup.com) was the exchange agent, and Deutsche Bank Luxembourg, SA (352 42122 243) was the Luxembourg exchange agent.

Citigroup Global Markets Inc. (800 558-3745 or 212 723-6108) and Deutsche Bank Securities Inc. (866 627-0391 or 212 250-2955) were the joint dealer managers.

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