Bond Equateur 7.25% ( XS2107382157 ) in USD

Issuer Equateur
Market price refresh price now   100 %  ⇌ 
Country  Ecuador
ISIN code  XS2107382157 ( in USD )
Interest rate 7.25% per year ( payment 2 times a year)
Maturity 30/01/2035



Prospectus brochure of the bond Ecuador XS2107382157 en USD 7.25%, maturity 30/01/2035


Minimal amount 200 000 USD
Total amount 400 000 000 USD
Next Coupon 30/01/2026 ( In 142 days )
Detailed description Ecuador, a South American country, boasts diverse ecosystems ranging from the Amazon rainforest to the Andes Mountains and the Galápagos Islands, showcasing rich biodiversity and significant cultural heritage.

Ecuador has issued a USD 400,000,000 bond (ISIN: XS2107382157) maturing January 30, 2035, with a 7.25% coupon rate, paying semi-annually, currently trading at 100% of par value and having a minimum trading size of USD 200,000.







OFFERING CIRCULAR
The Republic of Ecuador
U.S.$400,000,000 7.25% Social Housing Notes due 2035
partially guaranteed by
The Inter-American Development Bank
The Republic of Ecuador (the "Republic" or "Ecuador" or the "Issuer") is offering U.S.$400,000,000 aggregate principal amount of 7.25% partially guaranteed amortizing Social
Housing Notes due 2035 (the "Notes"). Interest on the Notes will be payable semi-annually in arrear on January 30 and July 30 of each year, commencing on July 30, 2020. The
Notes will be general, direct, unsecured, unsubordinated and unconditional obligations of the Republic, will be backed by the full faith and credit of the Republic and will rank
equally in terms of priority with the Republic's External Indebtedness (other than the Excluded Indebtedness), as defined in "Description of the Notes," provided that such ranking is
in terms of priority only and does not require that the Republic make ratable payments on the Notes with payments made on its other External Indebtedness.
The Notes will contain provisions, commonly known as "collective action clauses," regarding acceleration of the Notes and voting on future amendments, modifications and waivers
to the terms and conditions of the Notes. These provisions, which are described in the sections entitled "Description of the Notes--Events of Default" and "Description of the Notes--
Modifications­Collective Action," differ from those applicable to certain of the Republic's outstanding External Indebtedness (as defined herein). Under those provisions, the
Republic may: (a) amend the payment provisions of each Series of Notes and certain other reserved matters with the consent of the holders of 75% of the aggregate amount of the
outstanding Series of Notes and other non-reserved matters with the consent of the holders of 66% of the aggregate amount of the outstanding Series of Notes; (b) make reserved
matter modifications affecting two or more series of debt securities with the consent of (x) holders of at least 66% of the aggregate principal amount of the outstanding debt
securities of all series that would be affected by that reserved matter modification (taken in aggregate) and (y) holders of more than 50% of the aggregate principal amount of
the outstanding debt securities of each affected series (taken individually); or (c) make reserved matter modifications affecting two or more series of debt securities with the
consent of holders of at least 75% of the aggregate principal amount of the outstanding debt securities of all affected series (taken in aggregate), provided that the Uniformly
Applicable condition is satisfied, as more fully described in "Description of the Notes--Modifications--Collective Action."
The Inter-American Development Bank (the "IDB" or the "Guarantor") will, pursuant to a guarantee agreement dated on the Issue Date (in the form attached as Annex A, the
"Guarantee Agreement") irrevocably guarantee the payment of scheduled interest and principal payment amounts due under the Notes on each scheduled payment date therefor,
without regard to any acceleration under the Notes, to the extent that the aggregate of any such payment amounts remains unpaid by the Republic on such date (the
"Guarantee"); provided that the maximum amount payable by the Guarantor under the Guarantee in respect of all scheduled interest and/or principal amounts and all indemnity
obligations due in respect of each outstanding Note shall not exceed the lower of (a) U.S.$300 million, as reduced by any disbursements made under the Guarantee, and (b) the
"Maximum Guaranteed Notes Amount" which shall be, as of any date of determination, the sum set forth in Schedule I to the Guarantee, provided that following the
Guarantor's exercise of the IDB Right to Purchase (as defined and pursuant to the terms of the Guarantee), the Maximum Guaranteed Amount (as defined in the Guarantee)
shall equal U.S.$0. The Guarantee will not be accelerated except as provided for in the Guarantee Agreement in the event of a Guarantor Event of Default (as defined in the
Guarantee). The Notes are only an obligation of the Republic and the Guarantee is only an obligation of the IDB and not of any government. Unless otherwise terminated in
accordance with the terms of the Guarantee Agreement, the Guarantee shall remain in effect until the Termination Date. See "Annex A--The Guarantee Agreement,"
"Description of the Notes," "Guarantee Agreement," "The Inter-American Development Bank," and "General Information. "
Except as described herein, payments on the Notes will be made without deduction for or on account of withholding taxes imposed by the Republic. There is currently no
public market for the Notes. Application has been made to list the Notes on the Official List of the Luxembourg Stock Exchange and to have the Notes admitted to trading on
the Euro MTF Market. This Offering Circular has been approved as a prospectus issued in compliance with Part 2 of the rules and regulations of the Luxembourg Stock
Exchange by the Luxembourg Stock Exchange in its capacity as competent authority under Part IV of the Luxembourg law of July 16, 2019 on prospectuses for securities (the
"Prospectus Law") for the purposes of giving information with regard to the issue of the Notes. Application has been made to the Luxembourg Stock Exchange for the Notes to
be admitted to listing on the official list of the Luxembourg Stock Exchange (the "Official List") and for such Notes to be admitted to trading on the Euro MTF Market of the
Luxembourg Stock Exchange (the "Euro MTF Market"). References in this Offering Circular to Notes being "listed" on the Luxembourg Stock Exchange (and all related
references) shall mean that such Notes have been admitted to listing on the Official List and have been admitted to trading on the Euro MTF Market. The Euro MTF Market is
not a regulated market for the purposes of the Directive 2014/65/EU on markets in financial instruments. The Notes are and will be issued in registered form and, in limited
circumstances, definitive form in minimum denominations of U.S.$200,000 and integral multiples of U.S.$1,000 in excess thereof.
See "Risk Factors" beginning on page 36 regarding certain risk factors investors should consider before investing in the Notes.
________________________________
Notes Price: 100.000%
plus accrued interest, if any, from January 30, 2020.
Delivery of the Notes will be made on or about January 30, 2020.
Neither the Notes nor the Guarantee has been nor will be registered under the Securities Act of 1933, as amended (the "Securities Act"). The Notes may not be sold
within the United States or to U.S. persons except to qualified institutional buyers in reliance on the exemption from registration provided by Rule 144A under the
Securities Act and offered and sold to certain persons in offshore transactions in reliance on Regulation S under the Securities Act ("Regulation S"). Investors are
hereby notified that sellers of the Notes may be relying on the exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A under the
Securities Act.
The Notes will be represented by one or more permanent global notes in fully registered form without interest coupons, deposited with a common depositary for Euroclear Bank
S.A./N.V. ("Euroclear") and Clearstream Banking, société anonyme ("Clearstream"). Beneficial interests of Euroclear participants in the global notes will be shown on, and
transfers thereof between Euroclear participants will be effected only through, records maintained by Euroclear and its direct and indirect participants, including Clearstream
Banking, société anonyme. See "Book-Entry Settlement and Clearance."
Sole Global Coordinator, Bookrunner and Social Bond Structuring Agent
GOLDMAN SACHS & CO. LLC
The date of this Offering Circular is January 16, 2020.




IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE REPUBLIC OF ECUADOR AND THE TERMS OF THE OFFERING,
INCLUDING THE MERITS AND THE RISKS INVOLVED.
Investors should rely only on the information contained in this Offering Circular or to which the
Republic of Ecuador has referred investors. This Offering Circular supersedes any other materials dated
prior to the date hereof. Ecuador has not, and the Sole Global Coordinator, Bookrunner and Social Bond
Structuring Agent has not, authorized anyone to provide information that is different from the information
contained in this Offering Circular. This Offering Circular may only be used where it is legal to sell these
Notes. The information in this Offering Circular may only be accurate on the date of this Offering Circular.
This Offering Circular may only be used for the purposes for which it has been published.
_________________
TABLE OF CONTENTS
Page
PRESENTATION OF INFORMATION .................................................................................................................. VIII
FORWARD-LOOKING STATEMENTS ................................................................................................................ VIII
ARBITRATION AND ENFORCEABILITY............................................................................................................... X
EXCHANGE RATE INFORMATION .................................................................................................................... XIV
SUMMARY .................................................................................................................................................................. 1
The Republic of Ecuador ................................................................................................................................. 1
Recent Measures by President Moreno ........................................................................................................... 1
Organic Law for Productive Development ...................................................................................................... 4
Special Audit by the Office of the Comptroller General ................................................................................. 5
The Ecuadorian Economy ............................................................................................................................... 7
Balance of Payments and Foreign Trade ......................................................................................................... 8
Monetary System ............................................................................................................................................. 9
Public Sector Finances .................................................................................................................................. 11
Public Debt .................................................................................................................................................... 12
Ecuador - Selected Economic Indicators ....................................................................................................... 22
The Offering .................................................................................................................................................. 24
RISK FACTORS ......................................................................................................................................................... 36
Risk Factors Relating to the Notes ................................................................................................................ 36
Risk Factors Relating to the Guarantee ......................................................................................................... 41
Risk Factors Relating to Ecuador .................................................................................................................. 44
USE OF PROCEEDS .................................................................................................................................................. 59
THE REPUBLIC OF ECUADOR ............................................................................................................................... 60
Territory, Population and Society.................................................................................................................. 60
Pedernales Earthquake .................................................................................................................................. 61
Historical Background ................................................................................................................................... 63
Form of Government ..................................................................................................................................... 63
Memberships in International Organizations and International Relations .................................................... 74
THE ECUADORIAN ECONOMY ............................................................................................................................. 80
Gross Domestic Product ................................................................................................................................ 80
Economic and Social Policies ....................................................................................................................... 83
Strategic Sectors of the Economy .................................................................................................................. 94
Telecommunications ................................................................................................................................... 109
Other Sectors of the Economy ..................................................................................................................... 109
LEGAL PROCEEDINGS .......................................................................................................................................... 120
Notifications under Bilateral Investment Treaties ....................................................................................... 124
iii


BALANCE OF PAYMENTS AND FOREIGN TRADE .......................................................................................... 127
Balance of Payments ................................................................................................................................... 127
Current Account .......................................................................................................................................... 131
Capital and Financial Account .................................................................................................................... 132
International Reserves ................................................................................................................................. 133
Foreign Trade .............................................................................................................................................. 134
Trade Policy ................................................................................................................................................ 135
Regional Integration .................................................................................................................................... 136
Composition of Trade .................................................................................................................................. 137
Foreign Direct Investment ........................................................................................................................... 142
MONETARY SYSTEM ............................................................................................................................................ 144
The Central Bank ........................................................................................................................................ 144
Financial Sector ........................................................................................................................................... 146
Banking System........................................................................................................................................... 150
Banking Sector ............................................................................................................................................ 154
Cooperative Banks ...................................................................................................................................... 155
Capital Markets ........................................................................................................................................... 156
Interest Rates and Money Supply ................................................................................................................ 157
Inflation ....................................................................................................................................................... 160
PUBLIC SECTOR FINANCES ................................................................................................................................ 162
Overview ..................................................................................................................................................... 162
Non-Financial Public Sector Revenues and Expenditures .......................................................................... 167
Central Government Revenues and Expenditures ....................................................................................... 169
Taxation and Customs ................................................................................................................................. 170
Foreign Aid ................................................................................................................................................. 172
Central Government Expenditures .............................................................................................................. 172
2019 and 2020 Budgets ............................................................................................................................... 173
PUBLIC DEBT ......................................................................................................................................................... 175
General ........................................................................................................................................................ 175
External Debt............................................................................................................................................... 177
Debt with the Inter-American Development Bank ....................................................................................... 186
Internal Debt ................................................................................................................................................ 186
Methodology for Calculating the Public Debt to GDP Ratio ...................................................................... 188
Organic Law for Productive Development, Investment, Employment and Fiscal Stability ........................ 194
IMF's Extended Fund Facility ..................................................................................................................... 195
Debt Obligations ......................................................................................................................................... 200
GSI Loan Facility ........................................................................................................................................ 203
GSI Repo Transaction ................................................................................................................................. 206
CS Repo Transaction ................................................................................................................................... 209
THE INTER-AMERICAN DEVELOPMENT BANK.............................................................................................. 212
DESCRIPTION OF THE NOTES ............................................................................................................................. 219
THE GUARANTEE AGREEMENT......................................................................................................................... 241
SUMMARY OF THE GUARANTEE ESCROW AGREEMENT ........................................................................... 242
SUMMARY OF THE COUNTER-GUARANTEE AGREEMENT ......................................................................... 243
PLACEMENT ........................................................................................................................................................... 244
TRANSFER RESTRICTIONS .................................................................................................................................. 249
Book-Entry Settlement and Clearance ........................................................................................................ 252
Global Notes ................................................................................................................................................ 252
Exchanges between the Global Notes ......................................................................................................... 252
Book-Entry Procedures for the Global Notes .............................................................................................. 253
Definitive Notes .......................................................................................................................................... 254
TAXATION .............................................................................................................................................................. 255
iv


Ecuador Taxation ........................................................................................................................................ 255
United States Federal Income Taxation....................................................................................................... 255
VALIDITY OF THE NOTES ................................................................................................................................... 259
GENERAL INFORMATION .................................................................................................................................... 260
ANNEX A -- The Guarantee Agreement
v


The Notes will be general, direct, unsecured, unsubordinated and unconditional obligations of Ecuador, will
be backed by the full faith and credit of Ecuador and will rank equally in terms of priority with Ecuador's External
Indebtedness (other than the Excluded Indebtedness), as defined in "Description of the Notes", provided that such
ranking is in terms of priority only and does not require that Ecuador make ratable payments on the Notes with
payments made on its other External Indebtedness.
The Notes will be issued in registered form only. The Notes sold in offshore transactions in reliance on
Regulation S under the Securities Act ("Regulation S") will be represented by one or more permanent global notes
in fully registered form without interest coupons (the "Regulation S Global Note") and the Notes sold in the United
States to qualified institutional buyers (each a "qualified institutional buyer") as defined in, and in reliance on,
Rule 144A under the Securities Act ("Rule 144A") will be represented by one or more permanent global notes in
fully registered form without interest coupons (the "Restricted Global Note" and, together with the Regulation S
Global Note, the "Global Notes"), in each case deposited with and registered in the nominee name of a common
depositary for Euroclear for the respective accounts at Euroclear as such subscribers may direct. Beneficial interests
of Euroclear participants (as defined under "Book-Entry Settlement and Clearance") in the Global Notes will be
shown on, and transfers thereof between Euroclear participants will be effected only through, records maintained by
Euroclear and its direct and indirect participants, including Clearstream. See "Book-Entry Settlement and
Clearance." Except as described herein, definitive Notes will not be issued in exchange for beneficial interests in
the Global Notes. See "Description of the Notes--Definitive Notes." For restrictions on transfer applicable to the
Notes, see "Transfer Restrictions."
The Republic has taken reasonable care to ensure that the information contained in this Offering Circular,
other than the information relating to the IDB and to the Guarantee in "The Inter-American Development Bank" and
"The Guarantee Agreement," below, is true and correct in all material respects and not misleading as of the date
hereof, and that, to the best of the knowledge and belief of the Republic, there has been no omission of information
which, in the context of the issue of the Notes, would make this Offering Circular as a whole or any information
included in this Offering Circular, misleading in any material respect. The Republic accepts responsibility
accordingly.
However, the IDB accepts responsibility for the information contained or referred to in this Offering
Circular relating to the IDB and to the Guarantee in "The Inter-American Development Bank" and "The Guarantee
Agreement," below. The IDB has taken reasonable care to ensure that the information contained in this Offering
Circular relating to the IDB and to the Guarantee is true and correct in all material respects and not misleading as of
the date hereof, and that, to the best of the knowledge and belief of the IDB, there has been no omission of such
information which, in the context of the issue of the Notes, would make this Offering Circular as a whole or any
such information included in this Offering Circular, misleading in any material respect. The IDB has made no
investigation concerning any other information contained in this Offering Circular and makes no representations,
warranties or assurances of any nature as to the accuracy, completeness or sufficiency of that information and
assumes no responsibility with respect to that information.
This Offering Circular does not constitute an offer by, or an invitation by or on behalf of, the Republic or
Goldman Sachs & Co. LLC as sole global coordinator, bookrunner and social bond structuring agent in respect of
the placement of the Notes (the "Sole Global Coordinator, Bookrunner and Social Bond Structuring Agent") to
subscribe to or purchase any of the Notes. Each recipient shall be deemed to have made its own investigation and
appraisal of the financial condition of the Republic. The distribution of this Offering Circular or any part of it and
the offering, possession, sale and delivery of the Notes in certain jurisdictions may be restricted by law. Persons
into whose possession this Offering Circular comes are required by the Republic and the Sole Global Coordinator,
Bookrunner and Social Bond Structuring Agent to inform themselves about and to observe any such restrictions.
See "Transfer Restrictions" for a description of further restrictions on the offer, sale and delivery of Notes, the
distribution of this Offering Circular, and other offering material relating to the Notes.
Each person acquiring a Regulation S Global Note will be deemed to have represented that it is not
acquiring Notes with a view to distribution thereof in the United States.
vi


Each person acquiring a Restricted Global Note will be deemed to:

represent that it is acquiring the Notes for its own account or an account with respect to which it
exercises sole investment discretion and that it or such account is a qualified institutional buyer (as
defined in Rule 144A); and

acknowledge that the Notes have not been and will not be registered under the Securities Act or any
State securities laws and may not be reoffered, resold, pledged or otherwise transferred except as
described under "Transfer Restrictions."
Each person acquiring a Restricted Global Note also acknowledges that:

it has been afforded an opportunity to request from the Republic and to review, and it has received, all
additional information considered by it to be necessary to verify the accuracy of the information herein
and acknowledges that this Offering Circular supersedes any other information or presentation
regarding the Republic;

it has not relied on the Sole Global Coordinator, Bookrunner and Social Bond Structuring Agent, or
any person affiliated with the Sole Global Coordinator, Bookrunner and Social Bond Structuring Agent
in connection with its investigation of the accuracy of the information contained in this Offering
Circular or its investment decision;

no person has been authorized to give any information or to make any representation concerning the
Republic or the Notes other than those contained in this Offering Circular and, if given or made, such
information or representation should not be relied upon as having been authorized by the Republic or
the Sole Global Coordinator, Bookrunner and Social Bond Structuring Agent; and

the Notes are not intended to be offered, sold or otherwise made available, to and should not be
offered, sold or otherwise made available to, any retail investor in the European Economic Area
("EEA") or the United Kingdom. For these purposes, a retail investor means a person who is one (or
more) of: (i) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU (as
amended, "MiFID II"); (ii) a customer within the meaning of Directive (EU) 2016/97 (the "Insurance
Distribution Directive"), where that customer would not qualify as a professional client as defined in
point (10) of Article 4(1) of MiFID II; or (iii) not a qualified investor as defined in Regulation (EU)
2017/1129 (the "Prospectus Regulation"). Consequently no key information document required by
Regulation (EU) No 1286/2014 (as amended, the "PRIIPs Regulation") for offering or selling the
Notes or otherwise making them available to retail investors in the EEA or the United Kingdom has
been prepared and therefore offering or selling the Notes or otherwise making them available to any
retail investor in the EEA or the United Kingdom may be unlawful under the PRIIPS Regulation.
vii


IN CONNECTION WITH THIS ISSUANCE OF NOTES, THE SOLE GLOBAL COORDINATOR,
BOOKRUNNER AND SOCIAL BOND STRUCTURING AGENT MAY, ITSELF OR THROUGH ITS
AFFILIATES, OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE
MARKET PRICE OF THE NOTES AT A LEVEL WHICH MIGHT NOT OTHERWISE PREVAIL IN
THE OPEN MARKET, TO THE EXTENT PERMITTED BY APPLICABLE LAWS. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
PRESENTATION OF INFORMATION
Unless otherwise specified or the context requires, references to "U.S. dollars," "$" and "U.S.$" are to
United States dollars.
References to the "Republic" and "Ecuador" are to the Republic of Ecuador, references to the
"Government" are to the Government of the Republic of Ecuador and the use of the term "Governmental" shall be
with regards to the Government of the Republic of Ecuador.
References to "FOB" are to exports free on board and to "CIF" are to imports including cost, insurance and
freight charges.
References to laws that are "published" are to laws that have been approved by the Asamblea Nacional (the
"National Assembly"), a single chamber national assembly elected through direct popular vote for a four-year
period, and confirmed by the President.
Certain figures included in this Offering Circular have been rounded for ease of presentation. Percentage
figures included in this Offering Circular have not in all cases been calculated on the basis of such rounded figures
but on the basis of such amounts prior to rounding.
Certain economic and financial data in this Offering Circular is derived from information previously
published by Banco Central del Ecuador (the "Central Bank") and other Governmental entities of Ecuador. This
data is subject to correction and change in subsequent publications.
FORWARD-LOOKING STATEMENTS
This Offering Circular contains certain forward-looking statements (as such term is defined in the
Securities Act) concerning the Republic. These statements are based upon beliefs of certain Government officials
and others as well as a number of assumptions and estimates that are inherently subject to significant uncertainties,
many of which are beyond the control of the Republic. Future events may differ materially from those expressed or
implied by such forward-looking statements. Such forward-looking statements include information contained in the
sections "Summary," "The Republic of Ecuador," "The Ecuadorian Economy," "Balance of Payments and Foreign
Trade," "Monetary System," "Public Sector Finances" and "Public Debt" as well as:
External factors, such as:

lower petroleum and mineral prices, which could adversely affect Ecuador's economy, fiscal accounts and
International Reserves;

damage to and volatility in the international capital markets for emerging markets issuers caused by
economic conditions in other emerging markets or changes in policy of Ecuador's trading partners and the
international capital markets generally, which could affect Ecuador's ability to engage in planned
borrowing;

changes in import tariffs and exchange rates of other countries, which could harm Ecuador's exports and, as
a consequence, have a negative impact on the growth of Ecuador's economy;
viii



recession or low growth in the economies of Ecuador's trading partners, particularly of the United States
and the European Union, which could lead to fewer exports and affect Ecuador's growth;

a deterioration in relations between Ecuador and other countries in the region or other disruptions to
Ecuador's international relations;

changes in the credit rating of the Republic;

the impact of changes in the international price of commodities and, in particular, oil;

higher international interest rates, which could increase Ecuador's debt service requirements and require a
shift in budgetary expenditures toward additional debt service; and

terrorist attacks in the United States or elsewhere, acts of war, or any general slowdown in the global
economy.
Internal factors, such as:

social and political unrest in Ecuador;

Ecuador's ability to continue to attract foreign investment;

continued public support for Ecuador's current economic policies;

Ecuador's level of domestic debt;

general economic and business conditions in Ecuador; and

other factors identified or discussed under "Risk Factors."
In addition, in those and other portions of this Offering Circular, the words "anticipates," "believes,"
"contemplates," "estimates," "expects," "plans," "intends," "projections" and similar expressions, as they relate to the
Republic, are intended to identify forward-looking statements.
Undue reliance should not be placed on forward-looking statements, which are based on current
expectations. Forward-looking statements are not guarantees of future performance. They involve risks,
uncertainties and assumptions. Future results may differ materially from those expressed in forward-looking
statements. Many of the factors that will determine these results and values are beyond the Republic's ability to
control or predict. Because of the risks and uncertainties involved, an investment decision based on the estimates
and forward-looking statements should not be made. All forward-looking statements and risk factors included in
this Offering Circular are made as of the date on the front cover of this Offering Circular, based on information
available to the Republic as of such date, and Ecuador assumes no obligation to update any forward-looking
statement or risk factor.
ix


ARBITRATION AND ENFORCEABILITY
The Republic of Ecuador
The Republic is a sovereign state. Consequently, it may be difficult for investors to obtain or realize upon
judgments in the courts of the United States or otherwise to enforce the Republic's obligations under the Notes.
Under its Constitution, the Republic recognizes arbitration, mediation and other alternative dispute resolution
proceedings for the resolution of controversies. The Republic has not consented to the jurisdiction of any court in
connection with actions arising out of relating to or having any connection with the Notes and has submitted itself to
arbitration under the LCIA Rules (as defined below). This submission to arbitration has been approved by the
Office of the Attorney General as the competent body of the Republic which allows state courts to decide certain
matters as described below. See "Description of the Notes--Sovereign Immunity." The Republic has agreed to the
following arbitration provisions (which shall be governed by English law) as part of the terms and conditions of the
Notes under an indenture between the Republic and The Bank of New York Mellon (the "Trustee"), expected to be
dated on the Issue Date (the "Indenture"):
(a)
Any dispute, controversy or claim of any nature arising out of, relating to or having any
connection with the Indenture, including any dispute as to the existence, validity, interpretation,
performance, breach, termination or consequences of the nullity of the Indenture (a "Dispute")
where the Republic is either a party, claimant, respondent or is otherwise necessary thereto, will
not be referred to a court of any jurisdiction and will instead be referred to and finally resolved by
arbitration under the Rules of the London Court of International Arbitration ("LCIA") ("LCIA
Rules") as at present in force and as modified by the Indenture, in which LCIA Rules are deemed
to be incorporated by reference. The provisions in the LCIA Rules regarding an Emergency
Arbitrator shall not apply. In particular:
(i)
There will be three arbitrators.
(ii)
Each arbitrator will be an English or New York qualified lawyer of at least 15 years'
standing with experience in relation to international banking or capital markets disputes.
At least one of those arbitrators will be a lawyer qualified in New York.
(iii)
If there are two parties to the Dispute, each party will be entitled to nominate one
arbitrator. If there are multiple claimants and/or multiple respondents, all claimants
and/or all respondents will attempt to agree upon their respective nomination(s) such that
the claimants will together be entitled to nominate one arbitrator and the respondents will
together be entitled to nominate one arbitrator. If any such party or multiple parties fail
to nominate an arbitrator within 30 days from and including the date of receipt of the
relevant request for arbitration, an arbitrator will be appointed on their behalf by the
LCIA Court in accordance with the LCIA Rules and applying the criteria at clause (ii)
above. In such circumstances, any existing nomination or confirmation of the arbitrator
chosen by the party or parties on the other side of the proposed arbitration will be
unaffected, and the remaining arbitrator(s) will be appointed in accordance with the
LCIA Rules.
(iv)
The third arbitrator and chairman of the arbitral tribunal will be appointed by the LCIA
Court in accordance with the LCIA Rules and applying the criteria at clause (ii) above.
(v)
The seat, or legal place, of arbitration will be London, England.
(vi)
The language to be used in the arbitration will be English. The arbitration provisions
contained in the Indenture will be governed by English law.
x


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