Bondholders to receive 2% cash fee in domestic debt exchange – Finance Ministry

Participating holders of the 2023 bonds will receive a 2% cash fee, the Finance Ministry has said.

This is to compensate for the maturity extension.

It said the investors will only get new bonds maturing between 2027 and 2033.

“Given that holders of Eligible 2023 Bonds are being asked to extend the maturities of what are now effectively short-term instruments, investors will receive a cash tender fee of 2% of the outstanding amount of such 2023 Bonds tendered and accepted, to compensate for the maturity extension”, it explained In the Amendments to the Invitation to Exchange.

It emphasised that the government has decided to proceed with paying interest accrued up to January 24, 2023 to all Eligible Holders participating in the exchange, in a capitalised form. This means that the accrued interest will be added to the notional amount of the new bonds.

The Invitation to Exchange also stressed that there are 12 new bonds in the Amended Exchange, instead of four, with a new coupon rate structure.

“Investors indicated a preference for having more numerous bonds with standard bullet bonds, instead of fewer, larger and more liquid bonds (the previous structure), which has been reflected in the amended exchange. In the same spirit, the amended coupon structure for the new bonds has been designed to mimic a yield curve with a standard shape”.

Meanwhile, treasury bills remain still excluded from the domestic debt operations.