The Ministry of Finance finalized this Tuesday 30 the issuance of two sovereign bonds in pesos, through an instrument due in October 2029, for $1,300,000 million, and the reopening of a social bond due in April 2033, for $800,000 million (equivalent to a total of US$ 2,200 million, altogether). The transaction was made through book-building process, with simultaneous offerings in the local and international markets, and settlement via Euroclear for international investors.

The operation received demand from 55 local and international investor accounts, reaching a maximum demand of US$ 7 billion, i.e. 3.2 times the amount allocated.

As a result of the high interest expressed in the order book, the final rate could be adjusted from the initial price (“IPT”), reaching a rate of 6.0% for the new BTP-2029 and 6.20% for the BTP-2033, a decrease or compression of 20 basis points with respect to the initial rate, which implied a concession of 15 and 10 basis points with respect to the estimated value in the secondary market, respectively. The allocation was mostly to local investors.
At the same time, this operation reaffirmed the company's commitment to social, environmental and governance (ESG) principles, by including the reopening of the social bond in pesos with maturity in 2033. After this issuance, the share of ESG denominated bonds in the total stock will be 38%.

In this regard, the Minister of Finance, Mario Marcel, pointed out that “having obtained a demand of more than 3 times the amount offered demonstrates the appetite of local investors for the fixed income market and the rate shows the confidence in the sovereign instruments. Likewise, we are once again innovating by launching an issue with ESG standards, in line with our commitment to achieve, in the medium term, a participation between 40% and 50% of ESG debt in the total stock”.

This issue is part of the Treasury's local currency debt plan for 2024. As reported in January of this year, the total plan contemplates US$16.5 billion, of which 71% has already been issued, with use of debt margin.

Details of the Process

The allocation of the new BTP-2029 bond and the reopening of the BTP-2033 social bond was carried out through an over-the-counter (OTC) book-building process, in which both local and international investors participated simultaneously, in accordance with Rule 144A and Regulation S, issued under the U.S. Securities Exchange Act (“Regulation S”).  The portion allocated to foreign investors will initially be held in Euroclear Bank S.A./N.V.'s account at the Local Depository (DCV) and may be traded on that platform.

The banks coordinating the transaction were Santander, Citigroup and Banco Itaú. In addition, international legal counsel was provided by A&O Shearman and local counsel by Morales & Besa.