First Treasury Note 2026 under Panamenian Law and 144-A REG S DIRECCIÓN DE FINANCIAMIENTO PÚBLICO
1. The New 7-Year Euroclearable Local Treasury Note “Panota 2026”… DIRECCIÓN DE FINANCIAMIENTO PÚBLICO On April 10, 2019, the Republic of Panama, successfully priced a US$1.0 bn offering of new 7-year Euroclearable Local Treasury Note… Transaction Highlights Final Terms and Conditions • Panama’s first internationally placed under 144-A Reg S and local Baa1/BBB+/BBB Issuer Rating Law Instrument Rank Senior Unsecured • The Notes are listed on LatinClear, the local clearing house, and trades in Euroclear. 144A/Reg S Format • Strong investor participation from local and international accounts Principal Amount US$1.0 bn allowed Panama to tighten from initial price of T+150bps to a final spread of T+140bps. Maturity April 17th, 2026 • With this transaction Panama joined other Latin American Coupon 3.750% sovereigns such as Mexico, Peru, Chile, and Uruguay in an effort to develop its local market. Issue Price 99.847% Yield to Maturity 3.775% Joint Bookrunners Local Broker Dealer Listing LatinClear and Euroclear Law of the Rep. of Panama Governing Law
2. Demand and Allocation of Treasury Note “Panota 2026” DIRECCIÓN DE FINANCIAMIENTO PÚBLICO The Republic of Panama, on their first offering, managed to generate significant demand from top U.S., European and Latin American investors to build a strong order book, which reached 2x oversubscription. Allocation By Investor Type Allocation By Region LatAm 67% 25% 48% U.S. 16% 14% EMEA 2% 1% 27% A.M. P.F.I Banks Hedge Funds Others Source: Directorate of Public Financing Source: Directorate of Public Financing The notes were allocated to asset managers (67%), pension funds & From a geographical perspective, 48% was insurance companies (16%), banks (14%), and hedge funds (2%). allocated to U.S. investors, while 27% went to Europe and 25% to Latin American investors.
3. Panota 2026 – Secondary Market Performance DIRECCIÓN DE FINANCIAMIENTO PÚBLICO G-Spread differential Panota 2026 vs Panama Global Bond 2026 200 40 Lowest Spread 180 achieved 35 160 30 140 112 Spread Differential 25 120 101 G-Spread 100 20 100 92 80 15 60 10 40 5 20 - - 11-04-19 11-05-19 11-06-19 11-07-19 11-08-19 11-09-19 11-10-19 11-11-19 Differential Panota 3.75% 2026 Panama Intl Bond 2026 Source: Directorate of Public Financing From April to November, the Panota 2026 records an average differential of 19 basis points (bps) compared to our Global Bond of same maturity. It is important to point out that this differential has been tightening from 39bps, hitting a record differential of 1bp in September 16, 2019.
3. Panota 2026 – Secondary Market Performance DIRECCIÓN DE FINANCIAMIENTO PÚBLICO Panota 2026 as percentage of total Custody in Euroclear November 2019 76% 77% 76% 77% 77% 81% 81% April.19 May.19 June.19 July.19 August.19 Sept.19 Nov.19 Panota 2021 Pabono 2022 Panota 2023 Pabono 2024 Panota 2026 Source: Directorate of Public Financing From April to November, Panota 2026, has been the instrument with the highest amount in custody of Euroclear compared to the other local instruments.
4. Requirements of local regulation DIRECCIÓN DE FINANCIAMIENTO PÚBLICO “Macrotítulo” of Treasury Note 2026 As one of the requirements of our local regulation, a “Macrotítulo has to be signed by the General Comptroller of the Republic.
5. Pros and Cons – Panama experience DIRECCIÓN DE FINANCIAMIENTO PÚBLICO Participation of Increasing International liquidity and investors in Greater financial cost depth of the local local-law Higher legal and (the goal is to reduce the market issuances operational costs spread over the international curve) Pricing mechanism Investor base allowed spread diversification reduction during auction process Cons Pros Source: Directorate of Public Financing
DIRECCIÓN DE FINANCIAMIENTO PÚBLICO
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