BASSETERRE, St. Kitts – AN article carried by Reuters has commended the government of St. Kitts and Nevis for its recently-launched debt exchange offer, as part of its debt restructuring exercise.
The article, penned by London-based member of the Reuters’ investment strategy editorial team, Carolyn Cohn, strikes a comparison between the debt exchange offers of Greece and St. Kitts-Nevis – which both have similar debt to GDP ratios.
She however named St. Kitts and Nevis as having the better option.
Cohn explained that St. Kitts and Nevis’ “bond documentation already included collective action clauses (CACs) to force the minority who don’t want to participate in the debt exchange to do so” while in the case of Greece, that country retroactively made legislation for CACs.
The article quoted a renowned economist of Exotix (a frontier markets brokerage) – Gabriel Sterne –who expressed that, “It’s the right way to do a restructuring, unlike Greece”.
The article also explained that the absence of CACs with regard to Greece’s debt exchange offer had an unwanted ripple effect. And it suggested that St. Kitts-Nevis did not suffer through that ordeal because English law – under which the Federation operates – made specific provisions to guard against that.
“But where most Greek debt was issued under Greek law, requiring the imposition of retro-CACs to push through the country’s bond swap last week and regarded as a default by ratings agencies — triggering pay-outs on credit default swaps — the St. Kitts debt is covered by St. Kitts law. St Kitts law is based on English law and this means that any debt issued within the last 20 years or so will automatically contain a CAC.”
St. Kitts-Nevis’ debt exchange offer – which expires today - has been accepted by the Federation’s creditors.
