Chicago, April 25 – El Salvador listed its new offering of $1 billion of 9¼% notes due 2030 bundled with macro variable interest only step-up notes in Luxembourg, according to an offering document.
The notes amortize in three equal installments, on the four-year and five-year anniversaries and on the maturity date.
The purchase price was 90.839, broken down into 89.923 for the notes and 0.916 for the macro notes.
The atypical bundling includes a note with the 9¼% interest rate. Then, the bundled macro notes bear additional interest. Interest starts at ¼%. From Oct. 17, 2025, interest will be at ¼% or 4% based on whether the republic satisfies the “macro test.” On each measurement date, the republic will be evaluated on the satisfaction of at least one of an IMF condition or a ratings condition.
If the International Monetary Fund has completed at least one review, or granted approval, of an IMF stand-by arrangement or extended fund facility during the six months prior to the measurement date, the IMF condition will be deemed satisfied. The ratings condition will be satisfied if two out of three agencies, Moody’s Ratings, S&P Global Ratings or Fitch Ratings, have assigned the long-term foreign currency senior unsecured external debt of the republic as at least B2, B or B, respectively, as of the measurement date. If one of the conditions has been satisfied, the variable coupon will be ¼%. If neither have been satisfied, interest will be 4%.
The notes may be redeemed early with a Treasuries plus 50 basis points make-whole premium. There is also a one-month par call.
BofA Securities was the sole bookrunner.
Proceeds are being used to fund a tender offer for three notes, to make interest and principal payments under the 2025 notes not tendered and pay direction obligations of the ministry of finance under the republic’s approved budget.
The notes contain collective action clauses.
| Issuer: | El Salvador
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| Amount: | $1 billion
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| Issue: | Notes with macro variable interest only step-up notes
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| Maturity: | April 17, 2030
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| Bookrunner: | BofA Securities
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| Trustee: | Bank of New York Mellon
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| Counsel to issuer: | Arnold & Porter Kaye Scholer LLP, Rodolfo Antonio Delgado Montes Fiscal General de la Republica, Consortium Legal
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| Counsel to underwriters: | Clifford Chance US LLP, BLP Abogados
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| Coupon: | 9¼%, with step-up from bundled notes of ¼% to 4% based on conditions
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| Price: | 90.839
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| Call features: | Make-whole call at Treasuries plus 50 bps; one-month par call
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| Trade date: | April 11
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| Settlement date: | April 17
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| Distribution: | Rule 144A and Regulation S
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| Cusip: | 283875CE0, P01012CF1; interest-only notes 283875CD2, P01012CE4
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