Panama issues $1.363 billion of new 2036 bonds in debt swap

By Reshmi Basu

New York, Jan. 18 - The Republic of Panama announced that it will issue $1.363 billion in new 6.7% amortizing global bonds due 2036 in its Dutch auction exchange offer.

The new 2036 bonds were priced at 98.418.

Panama accepted $1.062 billion of existing global bonds maturing in 2020, 2023, and 2034.

Under the debt swap, Panama exchanged $117 million of its 10¾% global bonds due 2020 at an exchange price of 142.051 and a clearing spread of 173 basis points over Treasuries.

The country also accepted $617 million of its 9 3/8% global bonds due 2023 at an exchange price of 128.729 and a clearing spread of 202 basis points over Treasuries.

And Panama also exchanged $327 million of its 8 1/8% global bonds due 2034 at an exchange price of 116.157 and a clearing spread of 230 basis points over Treasuries.

The country did not accept any offers to exchange its 8 7/8% global bonds due 2027 and 9 3/8% global bonds due 2029.

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.

Panama previously announced the maximum clearing spreads for the existing bonds, saying they would be 173 basis points for the 10¾% bonds, 202 basis points for the 9 3/8% bonds, 215 basis points for the 8 7/8% bonds, 228 basis points for the 9 3/8% bonds and 230 basis points for the 8 1/8% bonds.

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

Holders who participated in the exchange could either submit a minimum spread that they would accept or a non-competitive bid. Non-competitive bids were accepted at the clearing level set in the auction.

Competitive bids were accepted from the highest downwards to the clearing spread. All holders whose bids were 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.

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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