Turkey begins exchange offer for seven series of notes

By Angela McDaniels

Seattle, Sept. 6 - The Republic of Turkey said it has begin a modified Dutch auction for its 11 3/8% notes due 2006, 10% notes due 2007, 10½% notes due 2008, 9 7/8% notes due 2008, 12% notes due 2008, 12 3/8% notes due 2009 and 11¾% notes due 2010.

Noteholders who exchange their notes will receive a number of new global notes due 2016 with a yet-to-be determined coupon equal to the price of the old notes divided by the price of the new notes, rounded down to the nearest $1,000 with the remainder paid in cash.

The old note price for each series will be set to give a yield to maturity equal to the spread for that series over the interpolated dollar swap rate to the maturity of that series as calculated at 11 a.m. ET on Sept. 14.

The spread is negative 30 basis points for the 11 3/8% notes, plus 10 basis points for the 10% notes, plus 20 basis points for the 10½% notes, plus 30 basis points for the 9 7/8% notes, plus 45 basis points for the 12% notes due, plus 80 basis points for the 12 3/8% notes and plus 110 basis points for the 11¾% notes.

The price of the new bonds will be calculated on 8 a.m. ET on Sept. 14 using a spread over the 10-year dollar interest rate swap benchmark. The spread will be set by Dutch auction.

Noteholders will also receive interest up to but excluding the settlement date.

The minimum clearing spread to apply for the auction will be announced on Sept 12, and the exchange offer ends at 11 a.m. ET on Sept. 13.

Roughly $7.4 billion of the old notes are outstanding, according to a Turkish news release.

Turkey may decide not to issue any new bonds but if it goes ahead the new series will have a minimum size of $1 billion.

The new bonds will be issued in minimum denominations of $100,000 and noteholders who hold less than $100,000 principal amount of any series of notes will receive cash in lieu of the new bonds.

Citibank NA is exchange agent for the offering (44 20 7508 3867 or exchange.gats@citigroup.com). Citigroup (800 558-3745 or 212 723-6108 in the United States or 44 20 7986 8969 in London) and Goldman Sachs International (866 627-0391 or 212 250-2955 in the United States and 44 20 7552 5754 or 44 20 7774 5982 in London) are joint dealer managers.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.