Securing Your Future Is Our Main Investment

Updated: 18-03-2024 - 12:00PM   2 6 CLOSED

Financial News

Jun 2018 Financial News

(BN) Barbados Cut to Selective Default by S&P After Missed Coupon

Jun 06, 2018

Barbados Cut to Selective Default by S&P After Missed Coupon 2018-06-06 17:52:05.693 GMT
By Matthew Bristow

(Bloomberg) -- Barbados was cut to selective default by S&P Global Ratings after missing a coupon payment this week. The government of Prime Minister Mia Mottley, which took office last week, said it would suspend payments on the Caribbean island’s “unsustainably high” debt burden, and this week missed a coupon on its bonds due 2035. S&P said it didn’t expect the payment to be made.

“We also believe that Barbados will fail to pay its other outstanding external debt obligations as they come due while it negotiates a restructuring agreement with external creditors,” S&P said in its report. “Barbados’ history of wider fiscal deficits and low growth since the global financial crisis has resulted in a significant increase in the government’s debt burden.” The yield on the nation’s dollar bonds due 2035 spiked to 16.2 percent this week, from 9.4 percent before the
announcement.

The $4.5 billion economy has barely grown over the last decade, as its currency pegged to the dollar made it hard to compete for tourists against cheaper destinations such as the Dominican Republic. As the economy stagnated, debt ballooned to 175 percent of gross domestic product, according to the government.

On Tuesday, the government said a team from the International Monetary Fund, led by economist Bert van Selm, had arrived in Bridgetown for three days of talks.

--With assistance from Ezra Fieser.

To contact the reporter on this story:
Matthew Bristow in Bogota at mbristow5@bloomberg.net
To contact the editors responsible for this story:
Matthew Bristow at mbristow5@bloomberg.net
Rita Nazareth