South Africa announces reference security, spread for new bonds to be issued in exchange, tender offers

By Angela McDaniels

Seattle, May 14 - The Republic of South Africa said the new bonds to be issued in connection with its exchange and tender offers for six series of bonds will be priced using the U.S. 4½% Treasury note due May 15, 2017 plus 120 basis points.

The new bonds will be denominated in dollars and will mature on May 30, 2022.

On May 8, the republic began an exchange and tender offer for its $1.5 billion 9 1/8% notes due May 19, 2009, its $237 million 8½% notes due June 23, 2017, up to $250 million of its $1 billion 7 3/8% notes due April 25, 2012 and up to $250 million of its $1 billion 6½% notes due June 2, 2014.

The republic is also holding tender offers for its €500 million 7% notes due April 10, 2008 and its €1.25 billion 5¼% notes due May 16, 2013.

The offers expire at 3 p.m. ET on May 15.

Holders will receive an equal amount of new bonds for old bonds exchanged.

The minimum denomination of the new notes will be $100,000, and holders of eligible notes must exchange at least that amount. Holders of less than $100,000 of notes may tender their securities.

The exchange is part of efforts to enhance the profile of the country's international debt, according to a news release.

The news release added that, as a whole, the transaction will have no impact on the amount of South Africa's debt in the international markets.

The reference security and spread ranges are the 4½% Treasury due April 30, 2009 and 28 bps for the 9 1/8% notes, the 4 5/8% Treasury due Feb. 15, 2017 and 64 bps for the 8½% notes, the 4½% Treasury due April 30, 2012 and 61 bps for the 7 3/8% notes and the 4½% Treasury due April 30, 2012 and 69 bps for the 6½% notes.

For each €1,000 principal amount, the payouts will be determined using one-year Euribor minus 15 bps for the 7% notes and the six-year Swaps rate plus 18 bps for the 5¼% notes.

The repurchase amount will be at least $750 million.

Holders who tender or exchange will also receive accrued interest in cash.

The settlement date is slated for May 30.

The notes will be accepted in the following order of priority: 9 1/8% notes, 7% notes, 8½% notes, 5¼% notes, 7 3/8% and 6½% notes.

The information and exchange agent is Bondholder Communications Group (contact Rachel Andrews 888 385-2663 or call collect 212 809-2663; 44 20 7382 4580).

The Luxembourg exchange agent is Deutsche Bank Luxembourg SA (00352 421 22 639 or fax 00352 47 31 36).

The joint dealer managers are Barclays Capital Inc. (866 307-8991 or call collect 212 412-4072; 44 20 7773 5484) and Citigroup Global Markets Inc. (800 558-3745 or call collect 212 723-6106; 44 20 7986 8969).

In addition, the republic may offer new notes for cash in an underwritten offering with Barclays and Citigroup Global Markets as joint bookrunners.

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