Grenada close to restructuring deal with bond creditors

NEW YORK – Grenada and creditors holding some US$200m of the Caribbean island’s defaulted bonds could announce a restructuring agreement as soon as today, according to two sources close to the negotiations.

Bondholders are expected to take a haircut of around 50 cents on the dollar, in line with a similar deal Grenada cut with Taiwan’s export-import bank in January over US$36.6m in defaulted loans, the sources said.

“There is a significant amount of debt relief and a fair amount of creditor protection language. There may also be ways in which bondholders overtime can recoup losses,” one of the two sources said.

While sovereigns from Argentina to Greece have used GDP warrants as part of debt restructurings to link repayment to economic performance, the island nation is expected to rely on a different structure given the small size of its economy.

“It’s not going to be GDP warrants,” said the second source. “But it is related to another potential revenue stream of the country.”

BroadSpan Capital, which is advising a committee of bondholders and White Oak, which is advising the sovereign, did not reply to requests for comment.

Grenada defaulted on a US$193m 2025 international bond as well as
some local debt in early 2013, after being hit by devastating hurricanes in 2004 and 2005 and by the global financial crisis.

The 2025 bonds were quoted on Tuesday at a wide bid-offer spread of 20-30, according to one trader.

The two-year old Keith Mitchell-led New National Party (NNP) administration in St. George’s entered into a Structural Adjustment Programme (SAP) with backing from the International Monetary Fund (IMF) to help buffer a deal with the U.S boldholders and other major debtors.

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