Banco Nacional de Panama cancels planned $759.72 million sale of Panama bonds via Citi

By Christine Van Dusen

Atlanta, Dec. 17 - The Banco Nacional de Panama canceled plans to sell a total of $759.72 million Republic of Panama global bonds via Citigroup, according to an FWP filing with the Securities and Exchange Commission.

The sale included $345.85 million of Panama's 6.7% global bonds due Jan. 26, 2036; $62.2 million of 8.125% bonds due April 28, 2034; and $351.667 million of 8 7/8% bonds due Sept. 30, 2027.

But after an auction for the 2036 bonds that attracted nearly $600 million in bids, the seller decided the results were "not compatible with the requirements of the fiduciary fund," the seller cancelled the 2036 sale and decided not to go ahead with the auctions for the other two tranches, according to the filing.

The 2036 bonds were originally issued in the amount of $1.36 billion on Jan. 26, 2006 with an add-on of $450 million issued on April 2, 2007. Panama repurchased $13 million on Oct. 22, 2008 and $15 million five days later. The minimum price was to be $103.25 per $100 principal amount of bonds, and the maximum was to be $107.25 per $100 principal amount of bonds.

The 2034 bonds were originally issued in the amount of $250 million on Jan. 28, 2004 with an add-on of $250 million on Aug. 11, 2005. Panama repurchased $327.2 million on Jan. 26, 2006 in a tender offer.

The 2027 bonds were originally issued in the amount of $700 million on Sept. 26, 1997 with an add-on of $275 million on Feb. 28, 2003.

The Banco Nacional de Panama was planning to sell the bonds in its role as trustee of the Fondo Fiduciario para el Desarrollo. The fund's assets are at present primarily in "marketable securities meeting established investment guidelines."

As of Oct. 31, the fund owned $902.217 million of Panama's debt securities that it acquired between 2000 and 2008 in the secondary market.

Proceeds were to be used for general governmental purposes, including the refinancing of domestic and external indebtedness and other budgetary purposes.

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