BASSETERRE, St. Kitts – FOLLOWING the recent announcement made by Prime Minister and Minister of Finance Dr. Denzil Douglas on the nonpayment of interests on government bonds, the Ministry of Finance issued a statement indicating that bondholders would soon be provided new terms of an exchange offer.
In a document dated November 30, 2011 and headlined “Message to Holders of Government of St. Kitts and Nevis 7.5% Bond due 2012-KNG 101112”, the ministry noted that bondholders “who are not already in contact with the Government and who wish to provide feedback are encouraged to contact the authorities’ financial advisors at skn@whiteoakadvisory.com
The statement noted that the government was faced with acute financing constraints and it announced on June 1, 2011 that it was embarking on a comprehensive debt restructuring exercise, aimed at addressing one of the most severe debt overhangs in the world.
It also noted that the debt restructuring and the return of the public debt burden to a sustainable footing is a key condition under the three-year Stand-By Arrangement with the International Monetary Fund, which was approved by that body’s Executive Board in August this year.
“Since the June announcement,” the statement reads, “various rounds of discussions with key creditors have been held. These have focused on the nature of the difficulties being experienced by St. Kitts and Nevis, as well as on the restructuring terms are required to restore debt sustainability.
“In this regard, the Government published indicative restructuring scenarios in August. All material information relevant to the restructuring is being posted by the Government on http://sknmof.comlcreditors.htm”
The statement however indicated that despite the difficulties, discussions with creditors are now in the advanced stage and the government would soon begin to finalise the terms of an exchange offer that would be open to bondholders.
Also, shareholders would be notified upon the launch of the exchange offer.
“In the meantime, the unavailability of sufficient funds to service all of the maturities falling due on debt that is eligible to be restructured means that the Government is not able to make the coupon payment that fell due on the above captioned security on 26 November 2011,” the statement read.
At his monthly press conference on Wednesday (Nov. 30), Dr. Douglas, in response to a question of bondholders not receiving their interests and asked to forebear, said the only bond which is to mature around this time, as far as he is aware, was issued on the Regional Government Securities Market (RGSM) and that it is valued at an approximate $75M.
“There are some bond holders on a particular bond that may be due for interest payment sometime this month and have been asked to hold because, as you know, we are engaged with our debt advisors on the restructuring of our debt and we have been advised that until the negotiations are completed, and a final position is taken, we would hold the payment of interest on these bonds until the final decision and agreement is made,” PM Douglas explained.
