Cedros residents say the southwestern peninsula may be a transit for drug trafficking but not a haven for human traffickers.
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Growth prospects slim as Grenada seeks debt swap
ST GEORGE’S, Grenada—Eight years after its last debt swap, Grenada is still struggling with its debt repayments and it has asked creditors to give it leeway to restructure US$193 million in debt that it says it cannot afford to repay.
“The global financial crisis has taken a heavy toll on the country and aggravated the severe debt overhang that continues to weigh down our economy,” new Prime Minister Keith Mitchell said in a recently released statement. “It is now time for Grenada to confront the fact that it cannot continue to pay its debts on current terms.”
According to Bloomberg, yields for Grenada’s dollar bonds surged to 17.35 per cent on March 8, the highest among 12 Caribbean and Central American nations tracked by JPMorgan Chase & Co’s CACI index.
The government is due to make a coupon payment today. If it misses it, this would be second after missing a coupon payment in September, leading investors to worry that the nation is heading for a default. The government paid investors before the end of the grace period after the last missed payment but Bloomberg reports the country’s dollar bonds have lost 5.2 per cent over the past year.
The 4.5 per cent coupon on the bonds was set to climb to six per cent in September and reach nine per cent in 2018 as part of a restructuring agreement reached with creditors in 2005. Grenada would be the third Caribbean country to restructure its debt this year. Jamaica said on March 1 that about 99 per cent of bondholders agreed to swap JAM $860 billion (US$9.1 billion) of higher interest local debt for lower yielding bonds. Belize is finishing negotiations on its second restructuring in five years, after missing a US$23 million coupon payment in August 2012.
Grenada had been rated CCC+ by Standard & Poor’s, placing the country of 109,000 in the same category as Jamaica and Cyprus. Marla Dukharan, an analyst with RBC Financial Caribbean Ltd in T&T is reported to have said that Grenada’s economy faces weak growth this year after suffering a 5.1 per cent drop in tourism and an 82 per cent reduction in grants in 2012. “The prospects for growth revival in Grenada are slim in 2013, and given severe fiscal and liquidity constraints, the proposed debt restructure announced last week seemed inevitable. It would come as no surprise if this proposed restructure involves a haircut,” Bloomberg quoted Dukharan as stating.