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Financial News

Apr 2015 Financial News

Grenada agrees to restructure debt

Apr 13, 2015

Grenada has reached an agreement with its creditors to restructure US$262 million it defaulted on in 2013.

Bondholders have agreed in principle to a 50 per cent cut in the bonds’ original value. In exchange, Grenada’s government will issue new bonds due in 2030 to existing bondholders, carrying an annual coupon of seven per cent.

It will also share with the bondholders a portion of revenues generated by its Citizenship by Investment Programme.

The deal ends a lengthy negotiation between the government and its creditors, including Franklin Templeton and Acadian Asset Management.

Despite Grenada’s small size, the agreement is being closely watched by international investors, as Greece and Ukraine are striving to sort out their debt problems with creditors.

The agreement could provide a road map for other countries.

“Grenada is just the first domino. There are other countries that are about to go through debt restructuring,” said Eric LeCompte, executive director of Jubilee USA Network, which helped negotiate the Grenada deal.

In the Caribbean, Jamaica, Antigua and Barbuda, St Lucia, St Vincent and the Grenadines and Dominica have large debt loads, he said.

The deal is likely to provide the island with a significant reprieve. The relief represents 19 per cent of Grenada’s gross domestic product, the statement said. But the country still has US$907 million in public-sector debt.

Grenada’s default took place after hurricanes wreaked havoc on the island’s economy.

Its economy is expected to grow by 1.2 per cent this year, according to the International Monetary Fund, and its public debt projected to reach 110.2 per cent of GDP.


Source:
Trinidad Guardian, A14
Monday April 13, 2015