Panama announces maximum spreads, new bond spread in Dutch auction exchange

New York, Jan. 17 - The Republic of Panama announced the maximum clearing spreads and the spread for the new issue of global bonds due 2036 in its Dutch auction exchange offer.

The spread on the new global bonds will be 230 basis points over Treasuries.

For the existing bonds, the maximum clearing spreads are:

• 10¾% dollar-denominated global bonds due 2020: 173 basis points;

• 9 3/8% global bonds due 2023: 202 basis points;

• 8 7/8% dollar-denominated global bonds due 2027: 215 basis points;

• 9 3/8% dollar-denominated global bonds due 2029: 228 basis points; and

• 8 1/8% global bonds due 2034: 230 basis points.

Panama announced the exchange on Jan. 10 announcing it was offering new global bonds due 2036 for its existing global bond issues.

Holders who participate in the exchange can either submit a minimum spread that they will accept or a non-competitive bid. Non-competitive bids will be accepted at the clearing level set in the auction.

Competitive bids will be accepted from highest downwards to the clearing spread. All holders whose bids are accepted will receive the clearing spread.

Bids were accepted up to 4:30 p.m. ET on Jan. 17. As scheduled, at 9 a.m. ET on that day, Panama announced the maximum clearing spread and the spread for the new bonds.

Each $1,000 principal amount of old bonds will be exchanged for $1,000 multiplied by the old bond exchange price divided by the new bond issuer price. Only whole numbers of new bonds will be issued, with fractions paid in cash.

Panama will also pay accrued interest on the old bonds up to but excluding the settlement date.

At 11 a.m. ET on Jan. 18, Panama will announce the actual clearing spread for each series of bonds accepted and also the rate on the benchmark U.S. Treasury due 2031 that will be used in setting pricing. It will also announce the principal amount of old bonds in each series that will be accepted in the exchange - a figure that could be zero - and the amount of new bonds to be issued, which could also be zero. In addition, it will disclose the coupon and issue price for the new bonds.

Settlement is scheduled for Jan. 26.

The new bonds will amortize in three equal installments beginning Jan. 26, 2034, with the final maturity on Jan. 26, 2036.

Provisions in the new bonds governing acceleration and future modifications are different to the existing bonds and most of Panama's current external debt, the country said in a news release. For the new securities, the payment provisions and some other terms can be amended with the consent of holders of 75% or more of the bonds.

D.F. King & Co., Inc. is information agent (banks and brokers call collect 212 269-5550; others call 800 290-6431). Citibank, NA is exchange agent (+44 20 7508 3867) and Dexia Banque Internationale à Luxembourg, SA is Luxembourg exchange agent.

Dealer managers are HSBC (866 898-6997 or call collect 212 525-5319) and JPMorgan (877 217-2484 or call collect 212 834-7306).

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