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Georgia issues new lot of Eurobonds

Monday, April 11
On April 7, 2011, Georgia successfully priced a new 10-year $500 million Reg S / 144A benchmark transaction and in parallel redeemed $417 million of its existing $500 million 7.50% bond due 2013 through an “any and all” cash tender:

- The tender participation ratio of 83% was very high and the majority of existing investors took advantage of the opportunity to swap their exposures into the new 10-year benchmark offering;

- A carefully implemented 3-days multi-team roadshow strategy, covering San Francisco, Los Angeles, Boston, New York, London, Frankfurt, Munich, Geneva, and Zurich, highlighted Georgia’s strong credit momentum and attracted numerous new institutional investors;

- As this was the government’s first 144A transaction, Georgia was able to successfully broaden its investor base particularly amongst new investors in the U.S.;

- In conjunction with the tender expiring on April 6 and on the eve of Portugal’s bail-out request, Georgia announced a 10-year EMBI-eligible benchmark bond along with a ‘mid-7%’ price whisper;

- On the back of a rapidly building order book, which garnered over $2.66 billion of total interest from 149 accounts, Georgia announced initial price guidance of ‘7.25 – 7.50%’ at the opening in London on April 7 and later priced the transaction with a yield of 7.125%, or a spread over mid-swaps of 346bps;

- While all other recent sovereign transactions required healthy new issue premiums over their existing curves, Georgia’s new 10-year offering priced 148bps inside of its existing bond due 2013, which traded at 494bps over swaps prior to the announcement of the tender;

- The transaction’s 357bps spread over the 10-year UST provides a 117bps improvement over Georgia’s shorterdated $500 million 5-year offering issued in 2008, or a 37.5bps decrease in yield terms;

- The achieved pricing level is also materially inside of other similarly rated sovereign issuance from the region;

- -S&P’s and Fitch’s decisions to upgrade Georgia's credit rating outlooks to ‘positive’ from ‘negative’ in March helped highlight the country’s positive credit momentum ahead of the deal announcement;

- Driven by the significant 5.3x oversubscription and transaction’s high scarcity value, the bond performed well in the secondary market, trading up to par on the day after pricing.