Issuance Terms and Conditions of the 91st Issue (T-Bond VAR %, 20 - CZ0001004113)

Dept 20 - Debt and Financial Assets Management Department
Dept 20 - Debt and Financial Assets Management Department

Published

  • State Debt
  • T-Bonds

Official information
of the Ministry of Finance
dated 2 May 2014
defining issuance terms and conditions of
“Government Bond of the Czech Republic, 2014–2020, VAR %“

The following is a translation of the issuance terms and conditions. The issuance terms and conditions are in the Czech language and in the case of any inconsistency between the English translation and the Czech language version, the Czech language version will prevail. 

The Ministry of Finance (hereinafter referred to as “the Ministry”) issues book-entered government Bonds within the scope defined by special law and determines their issuance terms and conditions in accordance with s. 26 of the Bonds Act, Act No. 190/2004 Coll. as amended (hereinafter referred to as “the Bonds Act”). These issuance terms and conditions set out the rights and obligations of the issuer and bondholders, as well as the information about the Bond issue and the elements of the Government Bond of Czech Republic, 2014–2020, VAR % (hereinafter referred to as the “Bond“ or the “Bonds“):

  1. Basic description of the Bonds:
    Issuer: Czech Republic – the Ministry of Finance
    Name: Czech Republic Government Bond, 2014–2020, VAR %
    Short name: ČR, VAR %, 20
    Serial number of issue: 91.
    Face value: CZK 10 000 Issue price: determined at auction
    Form of Bond: book-entered security on bearer
    Category of Bond: government Bond
    Currency in which the Bonds are denominated: Czech koruna (CZK)
    Beginning of the subscription period: 4 June 2014
    Termination of the subscription period: 9 November 2020
    Issue date: 9 June 2014
    Maturity date: 9 December 2020
    Interest: defined by floating interest rate
    Taxation of interest: according to the laws of the Czech Republic
    ISIN: CZ0001004113
  2. The Bonds are issued based on special laws in accordance with s. 25 (2) of the Bonds Act.
  3. The Bonds are book-entered securities. They are registered in the central record of book-entered securities maintained by the Central Depository of Securities (Centrální depozitář cenných papírů, a.s., having its registered office at Rybná 14, 110 05 Prague 1, Czech Republic, entered in the Commercial Register maintained by the Municipal Court in Prague, Section B, Insert 4308, ID No. 25081489, hereinafter referred to as the „Central Depository“) and persons authorized to maintain follow-up records. Other person than the Central Depository, which is authorized to maintain a record of book-entered securities, maintains a record based on the Ministry’s decision.
  4.  The Bonds may be acquired by legal or natural persons having their seat or residence in the territory of Czech Republic as well as abroad (hereinafter referred to as the “Investor” or "Investors").
  5. Right to interest payment has the person who is entitled to exercise the rights related to the Bond on 9 November 2014 and on 10 May and 9 November starting from 2015 according to the Annex I to the issuance terms and conditions. The right to interest payment from the issue date (inclusive of this date) to 9 December 2014 (exclusive of this date) has the person who is entitled to exercise the rights related to the Bond on 9 November 2014. Transferability of the Bonds after 9 November 2020 is excluded.
  6. The interest is defined by floating interest rate which is determined by the Ministry for each interest period on the reset date as the average reference interest rate minus the spread 0.30% p. a. (per annum). The interest rate will be published on reset date on the website of the Ministry. The minimum interest rate for each interest period is 0.00% p. a. The average reference interest rate is determined as arithmetic mean of the reference interest rate for five consecutive working days to three decimal places according to the Annex II to the issuance terms and conditions, the last day being the reset date in accordance with the article 7 of the issuance terms and conditions. The resulting average reference interest rate is rounded to two decimal places. The reference interest rate in relation to the respective interest period for the purposes of the issuance terms and conditions is 6M PRIBOR, which is reference value of interest rates in percentage terms (p. a.) for the sale of CZK deposits (offer) in the market of interbank deposits for a term of six months and is published on the website of the Czech National Bank. The interest based on the respective floating rate is paid semi-annually, always on 9 June and 9 December. If the payment date falls on a date which is not a working day, the payment will be made on the next working day without the entitlement to the proceeds for the deferred payment.
  7. The reset date for the purposes of the issuance terms and conditions in relation to the respective interest period is a working day that falls two working days prior the first day of the respective interest period. For the purposes of the first interest period the reset date is the auction date of the first tranche of the issue. If the reference interest rate 6M PRIBOR is not published on one of the five working days indicated in Annex II to the issuance terms and conditions, the reference interest rate shall be determined by the Issuer as arithmetic mean rounded to two decimal places of quotations for the sale (offer) in the market of interbank CZK deposits for a term of six months obtained after 11.00 a.m. (in words: eleven) Prague time quoted by at least five banks operating in the CZK interbank market chosen by the Issuer. If this way of determination is not possible, the last published 6M PRIBOR interest rate shall be used to determine the average reference interest rate and the interest for the respective interest period.
  8. For the avoidance of doubt, if the interest rate 6M PRIBOR is no longer used in the market of interbank deposits in general or in consequence of the Czech Republic’s transition to other legal currency, an interest rate used in the market of interbank deposits in the Czech Republic instead of 6M PRIBOR will be used for the purposes of the average reference interest rate determination according to the articles 6 and 7. The change of reference interest rate will be executed in accordance with the laws of Czech Republic valid on the date of the Czech Republic’s transition to other legal currency. The provisions of article 7 of the issuance terms and conditions will be used analogously.
  9. Interest period is 6 months, from 9 June (inclusive of this date) to 9 December (exclusive of this date) of the respective year and from 9 December of (inclusive of this date) the respective year to 9 June (exclusive of this date) of the following year. The first interest period for the interest payment begins on 9 June 2014 (inclusive of this date) and ends on 9 December 2014 (exclusive of this date). The second interest period for the interest payment begins on 9 December 2014 (inclusive of this date) and ends on 9 June 2015 (exclusive of this date). The calculation of interest and accrued interest for the period shorter than one year is carried out on the basis of one year of 360 (in words: three hundred and sixty) days and actual number of days in the respective period (standard ACT/360). Accrued interest is included in the Bond price from the issue date or from the beginning of the respective interest period to the date of the calculation of accrued interest.
  10. The issue of Bonds will be issued within the subscription period gradually (in tranches).
  11. The issue price of respective tranche of Bond is determined by the price achieved at auction.
  12. The Bonds will be offered for subscription in the Czech Republic. The Bonds will be offered for sale via the Czech National Bank pursuant to s. 26 (4) of the Bonds Act. Primary sale of Bonds, method and place of Bond subscription, method and time of delivery to individual subscribers and the manner and place of payment of the issue price of the subscribed Bonds is governed by the Rules for the Primary Sale of Government Securities organized by the Czech National Bank published on the website of the Czech National Bank and the Ministry. Primary sale of Bonds is carried out via auctions. The auction place is Czech National Bank. Only the person specified by the Issuer (hereinafter referred to as the “Primary Dealer” or “Primary Dealers”) or the Issuer may participate in the auction. Other investors may participate in the auction indirectly through Primary Dealers or the Issuer. The Issuer is authorized to book securities on the issue date firstly on its asset account in accordance with s. 15 (4) of the Bonds Act, and to acquire Bonds before the maturity date, including buy-backs of Bonds at any time and any price, and under other conditions defined by the Ministry. The Bonds acquired by the Issuer before the maturity date, including Bonds bought back by the Issuer, do not expire. It is at the Issuer´s discretion to keep the Bonds on its account, sell them or decide otherwise.
  13. Primary sale of the first tranche will be carried out by the method of American auction organized on 4 June 2014 by the Czech National Bank. The issuance and primary sale of further tranches will be decided by the Issuer, as well as the respective auctions dates. The announcement of the Bond auction is published on the website of the Ministry well in advance.
  14. The estimated total nominal value of the issue of Bonds is CZK 50 000 000 000 (in words: fifty billion Czech koruna). In accordance with s. 7 of the Bonds Act, the Bonds may be issued in smaller or larger volume than the estimated total nominal value of the issue. The possible increase in the volume of the issue is 30 000 000 000 CZK (in words: thirty billion Czech koruna).
  15. The Bonds will be redeemed at their nominal value on 9 December 2020. The interest of Bonds ends on this date. The nominal value of the Bonds will be repaid together with the last interest payment to the person, who will be the owner of the Bonds on 9 November 2020. If the repayment date of the nominal value of the Bonds falls on a day which is not a working day, the repayment will be made on the next working day without the entitlement to the proceeds for the deferred payment.
  16. The Issuer undertakes to ensure the interest payments and the repayment of the nominal value of Bonds according to these issuance terms and conditions to persons who are by these issuance terms conditions entitled to exercise the relevant rights related to the Bond exclusively in CZK or other currency, that will be the official currency of the Czech republic on the respective payment date. The redemption and interest payment is ensured by the Czech National Bank and the Ministry. The nominal value of the Bonds will be repaid and the interest of Bonds will be paid by cashless transfer or in cash, according to the instructions of persons who are entitled to exercise the relevant rights related to the Bond on the date set by these issuance terms and conditions. The payment place is the Czech National Bank that will publish the method of repayment of the nominal value and interest payment.
  17. Valid rating of long-term obligations denominated in CZK on the date of defining these issuance terms is at AA level by Standard & Poor's, at A1 level by Moody's and at AA- by Fitch Ratings.
  18. The Bonds are direct, unconditional and unsubordinated obligations of the Czech Republic, which are at the same level with all other existing and future direct, unconditional and unsubordinated obligations of the Czech Republic.
  19. All rights related to the Bond are subject to limitation of ten years from the date on which they could be exercised first pursuant to s. 42 of the Bonds Act.
  20. The Ministry announces these issuance terms and conditions in the Collection of Laws. All the announcements to the owners of Bonds and to the public regarding the Bonds are published in the Czech language on the website of the Ministry, in the section where information on issued government Bonds is published.
  21. These issuance terms and conditions may be translated into foreign languages. In case of any discrepancy between various language versions of issuance terms, the Czech version shall prevail.

 

Minister of Finance
Ing. Andrej Babiš

 

 

Annex I to issuance terms and conditions of Government Bond of the Czech Republic, 2014–2020, VAR %

Interest period Reset date Interest period Decisive day for interest payment Interest date
from* to**
Overview of interest periods and individual dates related to the interest payment
1 4.6.2014 9.6.2014 9.12.2014 9.11.2014 9.12.2014
2 5.12.2014 9.12.2014 9.6.2015 10.5.2015 9.6.2015
3 5.6.2015 9.6.2015 9.12.2015 9.11.2015 9.12.2015
4 7.12.2015 9.12.2015 9.6.2016 10.5.2016 9.6.2016
5 7.6.2016 9.6.2016 9.12.2016 9.11.2016 9.12.2016
6 7.12.2016 9.12.2016 9.6.2017 10.5.2017 9.6.2017
7 7.6.2017 9.6.2017 9.12.2017 9.11.2017 9.12.2017
8 7.12.2017 9.12.2017 9.6.2018 10.5.2018 9.6.2018
9 7.6.2018 9.6.2018 9.12.2018 9.11.2018 9.12.2018
10 6.12.2018 9.12.2018 9.6.2019 10.5.2019 9.6.2019
11 6.6.2019 9.6.2019 9.12.2019 9.11.2019 9.12.2019
12 5.12.2019 9.12.2019 9.6.2020 10.5.2020 9.6.2020
13 5.6.2020 9.6.2020 9.12.2020 9.11.2020 9.12.2020

 * Inclusive of this date
** Exclusive of this date

 

Annex II to issuance terms and conditions of Government Bond of the Czech Republic, 2014–2020, VAR %

Overview of dates of 6M PRIBOR publication for the purpose of average reference interest rate calculation
Interest period Reset date Dates of reference interest rate 6M PRIBOR publication
1 4.6.2014 29.5., 30.5., 2.6., 3.6., 4.6.
2 5.12.2014 1.12., 2.12., 3.12., 4.12., 5.12.
3 5.6.2015 1.6., 2.6., 3.6., 4.6., 5.6.
4 7.12.2015 1.12., 2.12., 3.12., 4.12., 7.12.
5 7.6.2016 1.6., 2.6., 3.6., 6.6., 7.6.
6 7.12.2016 1.12., 2.12., 5.12., 6.12., 7.12.
7 7.6.2017 1.6., 2.6., 5.6., 6.6., 7.6.
8 7.12.2017 1.12., 4.12., 5.12., 6.12., 7.12.
9 7.6.2018 1.6., 4.6., 5.6., 6.6., 7.6.
10 6.12.2018 30.11., 3.12., 4.12., 5.12., 6.12.
11 6.6.2019 31.5., 3.6., 4.6., 5.6., 6.6.
12 5.12.2019 29.11., 2.12., 3.12., 4.12., 5.12.
13 5.6.2020 1.6., 2.6., 3.6., 4.6., 5.6.