Renewable Energy

Creditors prepare to push back on Barbados debt proposal

Investors are preparing to push back on a restructuring proposal released this week by the government of Barbados, sources told IFR on Wednesday.

By Miluska Berrospi

NEW YORK, June 12 (IFR) - Investors are preparing to push back on a restructuring proposal released this week by the government of Barbados, sources told IFR on Wednesday.

After months of discussions with creditors, the government, which suspended debt payments last year, laid out on Tuesday two options for holders of its 7.25% 2021s, 7% 2022s and 6.625% 2035s.

They can either exchange that debt for an amortizing step-up note due 2033, which will be issued at a 66.67% discount, or a new 3.25% amortiser due 2044 to be issued at par.

But creditors, which had feared the government would launch an exchange without their consent, said such terms were unsatisfactory.

"We hope that before they actually launch an offer, the government will re-approach us and try to reengage in conversations," said an investor involved in the process.

"If they launch something we're prepared to reject it and wait," he added.

The creditor committee comprising both dollar bond and loan holders are preparing a response for later this week, sources said.

"The government of Barbados has improved the proposed terms as much as it possibly can given its commitment under the IMF-support program," the Barbados government said in a statement on Tuesday.

In October 2018, the International Monetary Fund (IMF)approved a US$290m bailout for the Caribbean nation.

"We are disappointed that they're taking the tone that they are. We think it's damaging to the country and to foreign investment," added the investor.

Creditors would have about three weeks to respond were the government to launch a formal exchange offer on the options presented.

No payments have been made on outstanding debt since Prime Minister Mia Mottley took office in May of last year.

The country restructured around Bds$12bn (US$6bn) of domestic last October.

(Reporting by Miluska Berrospi; Additional reporting by Chris Spink; Editing by Paul Kilby)

((Miluska.Berrospi@thomsonreuters.com;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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