Sovereign Analysis /

Barbados: Assessment of indicative restructuring terms

    Stuart Culverhouse
    Stuart Culverhouse

    Chief Economist & Head of Fixed Income Research

    Tellimer Research
    22 November 2018
    Published byTellimer Research

    The government published indicative restructuring scenarios for its external debt (ie US$ commercial debt) on 20 November. In this report, we assess the proposal and provide estimated recovery values.

    We retain our Hold on the bonds. At a 12% exit yield, we estimate PVs of the new bonds at 42.5 and 47.7 per unit of existing principal for restructuring scenarios 1 and 2, respectively. This compares with current prices of the BARBAD bonds of 57.1 for the 21s and 55.6 for the 22s, on an indicative mid-price basis on Bloomberg (as of cob 21 November). 

    We think secondary market prices can just about be rationalised with an exit yield of 10% (especially regarding the 22s), and bondholders might be able to improve terms slightly, providing this is consistent with the IMF programme, but clearly there are downside risks too.