12 April 2014

Tunisia: Conditions of Issuance and Repayment of 2014 National Bond - Exclusive Tap

Tunis — The draft decree-law setting conditions of the issuance and repayment of the 2014 national bond contains 9 articles defining the subscription and reimbursement methods, the nominal value of bonds and the interest rate, according to a document a copy of which was exclusively received by TAP.

This draft decree setting the conditions of repayment of the bond for 2014 was adopted by the Cabinet meeting held on Thursday, April 10, 2014.

The interim government is preparing to issue a bond by mid-May to mobilise 500 million dinars to cover part of the financing needs of the state budget for 2014, according to the Spokesman for the Government Nidhal Ouerfelli.

The bond opening and closing dates were set by order of the Minister of Economy and Finance but the document has not defined the duration of the subscription.

The draft decree states that the subscription to the national bond will be repaid in dinars and will be made through accounts opened with account managers such as banks and brokerage firms.

Article 4 of the draft decree allows subscribers to choose between three types of subscriptions:

The first type "A" allows for a five-year repayment period including a one-year

The principal of the bond will be repaid over four annual installments. The first installment expires two years after the closing of the subscription.

As for interests, they will be reimbursed upon maturity at an interest rate of 5.95% per annum. This type of subscription is for individuals.

The reimbursement of the second type of the bond (type B) was set at 7 years with a period of grace of 2 years. The nominal value of each bond was set at 100 dinars.

The principal of the bonds will be repaid over a five equal annual installments.

The first will be reimbursed three years after the closing date of the subscription at nominal annual interest rate of 6.15%.

The repayment of the third type of the loan (type C) was set at 10 years including a 2-year grace period with a nominal value of 100 dinars.

The principal will be reimbursed over eight equal annual installments.

The maturity of this bond is set three years after the closing date of subscriptions at an annual interest rate of 6.35%.

The total value of the three types of the loan was fixed at 100% of the nominal value of the bonds upon maturity.

Under article 6 of the decree, non-resident Tunisians may subscribe and purchase bonds in Tunisian dinar through the deduction of their foreign accounts opened in foreign currency or convertible dinar or also through a bank transfer from abroad.

Bondholders can convert the principal and interests in accordance with the law of exchange the regulation in force.

The bond is part of operations of the securities deposit, clearing and settlement company, an institution responsible for the management of subscribers to the bond as an authorised intermediary.

The cost of the launch of the subscription will be part of the public debt and will be deducted from the loan resources.

Tunisia has launched two national bonds since its independence in 1956: the first in 1964 to build the country and the second in 1986 after the economic crisis that hit the country in the 1980's.

The financing needs of the 2014 budget stand at 13 billion dinars shared out between external resources( 8billion dinars) and domestic resources (5 billion dinars).

Mr. Ouerfelli had indicated Thursday that the "situation of public finances is difficult and critical, particularly in terms of liquidity," saying the "deficit of the state budget was 1.1 billion dinars at the end of March 2014."

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