St Kitts and Nevis debt swap almost 100% successful
BASSETERRE, St Kitts, Thursday March 22, 2012 - The St Kitts and Nevis government has announced that it received overwhelming support from its creditors to its debt exchange offer, which expired at the end of business on March 14, 2012.
According to the federation government, 96.8% of the holders of aggregate amount of bonds and commercial loans eligible to participate in the exchange offer launched on February 27, 2012, agreed to provide extensive debt relief to the country by exchanging their claims on the government and its public sector for New Bonds.
By hitting this threshold, St Kitts and Nevis are now in position to trigger the collective action clauses (CACs) embedded in [four] of the Eligible Claims in accordance with the conditions of the exchange offer.
According to this provision, once the Extraordinary Resolutions specified in the Offering Memorandum are approved in bondholder meetings, holders of the 3.2% of Eligible Claims not tendered into the exchange offer will automatically receive New Discount Bonds in exchange for their instruments upon the settlement of the transaction.
Under the terms of the exchange offer, holders of Eligible Claims had the option of exchanging their instruments either for New Discount Bonds denominated in US dollars, or New Par Bonds denominated in EC dollars. The New Discount Bonds, which are to be partially guaranteed by the Caribbean Development Bank, entail a 50% reduction in face value. The balance is to be repaid over 20 years, with coupons set at 6% for the first four years, stepping down to 3% thereafter. The New Par Bonds will have a final maturity of 45 years, inclusive of a 15-year grace period on principal. Interest is fixed at 1.5% throughout.
Preliminary results indicate that holders with approximately two-thirds of the aggregate amount of Eligible Claims tendered chose to receive New Discount Bonds, with the remainder electing New Par Bonds.
It is therefore anticipated that, after the activation of CACs as described above, 100% of the aggregate amount of Eligible Claims will be restructured.
Dr Denzil Douglas, St Kitts and Nevis prime minister and minister of finance, said: “This is indeed a historic day for St Kitts and Nevis. The outstanding results of the exchange offer will provide extensive and permanent levels of debt relief to our country. The balances remaining will then be repaid over an extended period at concessional rates of interest, making our debt one of the most sustainable in the region.”
“This outcome is a resounding affirmation of our determination and perseverance in implementing necessary reforms and in engaging our creditors in a frank and open discussion over the challenges facing the country and the region. I would like to thank our creditors for their cooperation and the support that they have shown for St Kitts and Nevis. We view these results as a vindication of the tough decisions that we have had to take at home against a very difficult global economic backdrop. They give us the strength to press on with this process of transformation.”
The exchange offer is expected to close mid-April.