Peru noteholders exchange $2.489 billion notes for new notes or cash

By Angela McDaniels

Seattle, Feb. 22 - The Republic of Peru said it accepted all of the 9 1/8% global bonds due 2012 and Brady bonds tendered during its exchange offer, which ended on Thursday.

In total, noteholders tendered $1.021 billion of the 9 1/8% notes: $855 million in exchange for $833 million of reopened 8 3/8% global bonds due 2016, $95 million in exchange for $85 million of reopened 8¾% global bonds due 2033 and $71 million in exchange for cash.

For each $1,000 principal amount of 9 1/8% bonds exchanged, holders will receive an amount of reopened bonds equal to the product of $1,000 multiplied by the 9 1/8% bond price, divided by the sum of the applicable reopened bond issue price plus accrued interest.

The 9 1/8% bond price is $1,174.59 per $1,000 principal amount, which is based on the clearing spread of 40 basis points as determined under the reverse modified Dutch auction. The issue price of the 8 3/8% bonds iss $1,175.08 per $1,000 principal amount, and the issue price of the 8¾% bonds is $1,294.00 per $1,000 principal amount.

Peru will also pay accrued interest up to but excluding the settlement date.

Holders who tendered for cash will receive $1,174.59 per $1,000 principal amount plus accrued interest up to but excluding the settlement date.

Brady bond offer

In total, noteholders tendered $1.468 billion of Brady bonds in exchange for cash or new 6.55% global bonds due March 14, 2037, which priced at par on Friday.

Of the $691 million past-due interest bonds due 2017 tendered, $685 million were exchanged for $499 million of the new bonds and $6 million were tendered for cash.

Of the $684 million front-loaded interest reduction bonds due 2017 tendered, $675 million were exchanged for $633 million of new bonds and $9 million were tendered for cash.

Of the $82 million floating-rate discount bonds due 2027 tendered, $65 million were exchanged for $64 million of new bonds and $17 million were tendered for cash.

Of the $11 million fixed-rate bonds due 2027 tendered, $7 million were exchanged for $5 million of new bonds and $4 million were tendered for cash.

For each $1,000 principal amount of Brady bonds exchanged for the new bonds, holders will receive an amount of new 30-year bonds equal to the product of $1,000 multiplied by the applicable Brady bond price multiplied by the applicable factor, divided by the sum of the new 30-year bond price plus accrued interest.

The applicable Brady bond price is $997.50 for the past-due interest bonds due 2017, front-loaded interest reduction bonds due 2017 and floating-rate discount bonds due 2027 and $800.00 for the fixed-rate bonds due 2027.

The applicable factor is 0.73 for the past-due interest bonds due 2017, 0.94 for the front-loaded interest reduction bonds due 2017 and 1.00 for the floating-rate discount bonds due 2027 and the fixed-rate bonds due 2027.

Holders who chose to tender for cash will receive an amount equal to the applicable Brady bond price multiplied by the applicable factor. Peru will also pay accrued interest up to but excluding the settlement date.

Settlement is expected to occur on March 14.

Global Bondholder Services Corp. (212 430-3774 for banks and brokers or 866 736-2200 toll-free) was the information agent. Citigroup Global Markets Inc. (212 723-6106 or 800 558-3745) and Deutsche Bank Securities Inc. (866 627-0391 or 212 250-2955) were the dealer managers.

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