Cleary Gottlieb represented the United Mexican States in a Rule 144A/Reg. S offering of Mexico’s Series XWE07 Warrants and XWD07 Units, each Unit consisting of one Series XWDA07 Warrant and one Series XWDB07 Warrant, which will trade separately after September 24, 2007. The transaction closed on March 21.
The Series XWE07, XWDA07 and XWDB07 Warrants entitle the holders to exchange, on September 19, October 11, and November 7, 2007, respectively, up to approximately $2.7 billion of various series of outstanding U.S. dollar, euro, Italian lira and Deutsche mark-denominated bonds issued by Mexico for peso-denominated bonds.
The offering marks another step in Mexico’s strategy of reducing its external indebtedness by replacing it with peso-denominated debt. In March 2006, Mexico issued Series XWE Exchange Warrants, enabling investors to swap approximately €600 million of euro, Italian lira and Deutsche mark-denominated debt into pesos.
The bonds to be tendered on exercise of the warrants include 21 different series of bonds maturing between 2008 and 2033 that are governed by New York or German law. The two series of peso-denominated MBonos (bonds issued by the Mexican government) to be acquired in exchange are governed by Mexican law and will mature in 2014 and 2024, respectively. The MBonos have no covenants, no events of default, no gross-up for Mexican taxes and are not subject to New York or U.S. federal court jurisdiction.
Credit Suisse and Goldman Sachs acted as the joint lead managers for the deal. Citibank, N.A., London Branch will serve as warrant agent.