The government published revised restructuring scenarios for its external debt (ie US$ bonds and loans) on 11 June (see here). These follow the first set of indicative restructuring scenarios presented in November (see our research here). In this note, we assess the new proposal and provide estimated recovery values.
The new US$ discount bond (Scenario 1) presented in the revised scenarios has slightly better terms than before, and we think implies a slightly lower PV haircut, but it is still quite large (c40%).
We retain our Hold recommendation on the existing bonds. At a conservative 12% exit yield, we estimate a PV of the new US$ discount bond at 51.7 per unit of existing principal. The estimated recovery value rises to 59.1 per unit of existing principal at a 10% exit yield. This compares with the market context of mid-60s for the existing BARBAD bonds before the news. The existing bonds may therefore appear a bit rich – or current prices can only be justified on a more aggressive exit yield assumption, but given limited liquidity conditions in the bonds, we reiterate Hold.