GOVERNMENT IS BEING WARNED that its debt restructuring offer to external creditors will be rejected unless it is based on negotiations.
The Barbados External Creditor Committee, whose debt Barbados has defaulted on for the past year, yesterday said its members were ready to continue debt restructuring discussions with Government.
But making it clear it held more than 55 per cent of the aggregate total of the instruments it represented, the group said “any unilateral ‘formal offer’ will be met with unanimous rejection by its members”.
It also stressed such an approach would “put at risk” the progress already been made.
“By avoiding unilateral actions and engaging with goodwill on both sides, the parties could reach agreement on a mutually acceptable restructuring,” the group added in its latest statement on the matter.
The committee said its members included longterm investors, regional and international financial institutions, regional central banks and individual bondholders. They are being advised by London firm Newstate Partners LLP and Arnold & Porter, which is based in Washington DC.
The group was responding to the Ministry of Finance’s recent announcement that a “formal offer”, possibly with improved terms, would be made to holders of Barbados debt denominated in United States dollars.
“The committee has concerns over the language used in the statement, which seems to suggest that the authorities intend to simply collect feedback from the committee, and thereafter launch an unsupported ‘formal offer’ to creditors,” the creditors said.
Not consistent
“The committee does not consider this course of action to be consistent with the principles of good faith negotiation that have formed the basis for the engagement to date, nor is it consistent with best practices employed in the context of sovereign debt restructurings generally, and notes that such an approach would put at risk the progress that has already been made during such negotiations.”
The creditors group said its representatives submitted a revised proposal to Government two weeks ago “based on terms that aim to support the Government’s debt and reform objectives, while creating restructured instruments with broad market acceptance.
Good faith
“The committee reiterates its desire and commitment to continue engaging with the authorities and their advisors in good faith discussions to reach a consensual resolution to the outstanding external US dollardenominated commercial debt default, and urges the authorities to consider the same,” it added.
“The committee strongly believes that the launch of a unilateral exchange offer by the Government of Barbados without the support of the committee will be highly detrimental to the country’s economic stability.”
While noting that Government had met its targets under the Barbados Economic Recovery and Transformation (BERT) plan, and related International Monetary Fund programme, the committee said it “remains concerned that any positive impact associated with the continued implementation of the BERT programme will be muted by the persistent state of default, since June 1, 2018, on Barbados’ US dollar-denominated commercial debt facilities”.
(SC)
