Filed pursuant to Rule 433
Registration Statement 333-250981
Relating to Preliminary Prospectus Supplement dated March 21, 2023
Republic of Panama
U.S.$800,000,000 6.400% Global Bonds due 2035
March 21, 2023
Term Sheet
| Issuer: | Republic of Panama (“Panama” or the “Republic”) | |
| Transaction: | 6.400% Global Bonds due 2035 (the “2035 Global Bonds”) | |
| Distribution: | SEC-Registered Global Bonds | |
| Ranking: | Senior Unsecured | |
| Expected Ratings*: | Baa2 (negative) / BBB (negative) / BBB- (stable) (Moody’s / S&P / Fitch) | |
| Amount Issued: | U.S.$800,000,000 aggregate principal amount | |
| Coupon: | 6.400% (30/360 day count basis) | |
| Maturity: | February 14, 2035 | |
| Offering Price: | 101.961% of principal amount plus accrued interest, totaling U.S.$ 6,257,777.78, or U.S.$ 7.822 per U.S.$ 1,000 principal amount of the 2035 Global Bonds, from February 14, 2023, to, but not including, March 28, 2023, plus accrued interest, if any, from March 28, 2023 | |
Gross Proceeds to the Issuer (before deducting underwriting fees and other offering expenses and excluding accrued interest): | U.S.$ 815,688,000 | |
| Yield to Maturity: | 6.161% | |
| Spread to Benchmark Treasury: | 255 basis points | |
| Benchmark Treasury: | 3.500% due February 15, 2033 | |
| Benchmark Treasury Price and Yield: | 99-02+; 3.611% | |
| Reopening: | The 2035 Global Bonds constitute a further issuance of, and will form a single series with, the U.S.$ 1,500,000,000 aggregate principal amount of Panama’s 6.400% Global Bonds due 2035 issued on November 21, 2022. | |
| Listing and Trading: | Application will be made to list the 2035 Global Bonds on the Official List of the Luxembourg Stock Exchange and to have the 2035 Global Bonds admitted to trading on the Euro MTF Market. | |
| Optional Redemption: | Prior to November 14, 2034 (three months prior to their maturity date) (the “2035 Par Call Date”), Panama may redeem the 2035 Global Bonds at its option, in whole or in part, at any time and from time to time, at a redemption price (expressed as a percentage of principal amount and rounded to three decimal places) equal to the greater of: | |
| (1) (a) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the redemption date (assuming the 2035 Global Bonds matured on the 2035 Par Call Date) on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 40 basis points less (b) interest accrued to the date of redemption, and | ||
(2) 100% of the principal amount of the 2035 Global Bonds to be redeemed,
plus, in either case, accrued and unpaid interest thereon to the redemption date.
On or after the 2035 Par Call Date, the Republic may redeem the 2035 Global Bonds, in whole or in part, at any time and from time to time, at a redemption price equal to 100% of the principal amount of the 2035 Global Bonds being redeemed plus accrued and unpaid interest thereon to the redemption date.
The following terms shall have the following meanings:
“Treasury Rate” means, with respect to any redemption date, the yield determined by the Republic, in accordance with the following two paragraphs.
The Treasury Rate shall be determined by the Republic after 4:15 p.m., New York City time (or after such time as yields on U.S. government securities are posted daily by the Board of Governors of the Federal Reserve System), on the third business day preceding the redemption date based upon the yield or yields for the most recent day that appear after such time on such day in the most recent statistical release published by the Board of Governors of the Federal Reserve System designated as “Selected Interest Rates (Daily)—H.15” (or any successor designation or publication) (“H.15”) under the caption “U.S. government securities–Treasury constant maturities–Nominal” (or any successor caption or heading). In determining the Treasury Rate, the Republic shall select, as applicable: (1) the yield for the Treasury constant maturity on H.15 exactly equal to the period from the redemption date to the 2035 Par Call Date (the “Remaining Life”); or (2) if there is no such Treasury constant maturity on H.15 exactly equal to the Remaining Life, the two yields – one yield corresponding to the Treasury constant maturity on H.15 immediately shorter than | ||
| and one yield corresponding to the Treasury constant maturity on H.15 immediately longer than the Remaining Life – and shall interpolate to the 2035 Par Call Date on a straight-line basis (using the actual number of days) using such yields and rounding the result to three decimal places; or (3) if there is no such Treasury constant maturity on H.15 shorter than or longer than the Remaining Life, the yield for the single Treasury constant maturity on H.15 closest to the Remaining Life. For purposes of this paragraph, the applicable Treasury constant maturity or maturities on H.15 shall be deemed to have a maturity date equal to the relevant number of months or years, as applicable, of such Treasury constant maturity from the redemption date. | ||
| If on the third business day preceding the redemption date H.15 or any successor designation or publication is no longer published, the Republic shall calculate the Treasury Rate based on the rate per annum equal to the semi-annual equivalent yield to maturity at 11:00 a.m., New York City time, on the second business day preceding such redemption date of the United States Treasury security maturing on, or with a maturity that is closest to, the 2035 Par Call Date, as applicable. If there is no United States Treasury security maturing on the 2035 Par Call Date but there are two or more United States Treasury securities with a maturity date equally distant from the 2035 Par Call Date, one with a maturity date preceding the 2035 Par Call Date and one with a maturity date following the 2035 Par Call Date, the Republic shall select the United States Treasury security with a maturity date preceding the 2035 Par Call Date. If there are two or more United States Treasury securities maturing on the 2035 Par Call Date or two or more United States Treasury securities meeting the criteria of the preceding sentence, the Republic shall select from among these two or more United States Treasury securities the United States Treasury security that is trading closest to par based upon the average of the bid and asked prices for such United States Treasury securities at 11:00 a.m., New York City time. In determining the Treasury Rate in accordance with the terms of this paragraph, the semi-annual yield to maturity of the applicable United States Treasury security shall be based upon the average of the bid and asked prices (expressed as a percentage of principal amount) at 11:00 a.m., New York City time, of such United States Treasury security, and rounded to three decimal places. | ||
The Republic’s actions and determinations in determining the redemption price shall be conclusive and binding for all purposes, absent manifest error.
Notice of any redemption will be mailed or electronically delivered (or otherwise transmitted in accordance with the depositary’s procedures) at least 10 days but not more than 60 days before the redemption date to each holder of the 2035 Global Bonds to be redeemed.
In the case of a partial redemption, selection of the 2035 Global Bonds for redemption will be made pro rata, by lot or by such other method as the Fiscal Agent in its sole discretion deems appropriate and fair. No 2035 Global Bonds of a principal amount of $200,000 or less will be redeemed in part. If any 2035 Global Bond is to be redeemed in part only, the notice of redemption that relates to the 2035 Global Bond will state the portion of the principal amount of the 2035 Global Bond to be redeemed. A new 2035 Global Bond in a principal amount equal to the unredeemed portion of the 2035 Global Bonds will be issued in the name of the holder of the 2035 Global Bond upon surrender for cancellation of the original 2035 Global Bond. For so long as the 2035 Global Bonds are held by DTC (or another depositary), the redemption of the 2035 Global Bonds shall be done in accordance with the policies and procedures of the depositary.
Unless the Republic defaults in payment of the redemption price, on and after the redemption date interest will cease to accrue on the 2035 Global Bonds or portions thereof called for redemption. | ||
| Use of Proceeds: | Panama will use the proceeds from the 2035 Global Bonds for general budgetary purposes and liability management transactions. | |
| Governing Law: | State of New York | |
| Underwriting Fee: | 0.050% | |
| Form: | Book-Entry Only, registered in the name of Cede & Co., as the nominee of DTC | |
| Denominations: | U.S.$200,000 and integral multiples of U.S.$1,000 in excess thereof. | |
| Interest Payment Dates: | February 14 and August 14 of each year | |
| First Coupon Payment Date: | August 14, 2023 | |
| Settlement Date: | March 28, 2023 (T+5) | |
| CUSIP/ISIN: | 698299 BT0 / US698299BT07 | |
Under the terms and subject to the conditions contained in an Underwriting Agreement incorporated by reference in the Terms Agreement, dated March 21, 2023, Goldman Sachs & Co. LLC and Scotia Capital (USA) Inc. as the underwriters have severally agreed to purchase and the Republic of Panama has agreed to sell to the underwriters, the principal amount of the 2035 Global Bonds indicated below:
Underwriters:
Goldman Sachs & Co. LLC | U.S.$ | 400,000,000 | ||
Scotia Capital (USA) Inc. | U.S.$ | 400,000,000 | ||
Total | U.S.$ | 800,000,000 |
| * | Note: A securities rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time. Each securities rating should be evaluated independent of each other securities rating. |
The Republic has announced a tender offer to purchase for cash up to U.S.$400 million principal amount of its 4.95% Treasury Bonds due 2024 (the “Local Offer”), subject to the terms and conditions of such offer. This Term Sheet does not constitute a solicitation of an offer to sell any securities of the Republic in the Local Offer.
Goldman Sachs & Co. LLC and Scotia Capital (USA) Inc. are not acting as dealer managers in connection with the Local Offer.
A preliminary prospectus supplement of the Republic of Panama accompanies the free-writing prospectus and is available from the SEC’s website at https://www.sec.gov/Archives/edgar/data/76027/000119312523075368/d478070d424b3.htm .
The issuer has filed a registration statement (including a prospectus) with the Securities and Exchange Commission for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents the issuer has filed with the Securities and Exchange Commission for more complete information about the issuer and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the issuer, any underwriter or any dealer participating in the offering will arrange to send you the prospectus if you request it by calling, toll-free, Goldman Sachs & Co. LLC at +1 (800) 828-3182 or Scotia Capital (USA) Inc. at +1 (800) 372-3930.
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