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Barbados announced a technical default on coupon of Eurobonds with maturity in 2035

June 07, 2018 | Cbonds

The Ministry of Finance and Economic Affairs of Barbados announced that it will not perform its obligation to pay the 26th coupon on Eurobonds maturing in 2035 (USP48864AF26), the issuer said.

The size of the obligation in monetary terms amounted to 8,446,875 USD, per bond – 3,312.5 USD. The scheduled settlement date for fulfillment is June 5, 2018; the scheduled actual settlement date for fulfillment is June 19, 2018. The issue volume is 255 million USD.

It is also reported that S&P Global Ratings downgraded from "CCC+" to "SD" the Foreign Currency LT credit rating and from "CCC" to "CC" the Local Currency LT credit rating of Barbados today.

The first woman the Prime Minister of Barbados elected in May, Mia Mottley, disclosed previously uncovered financial obligations of the state. The Prime Minister said that the new government inherited 15 billion Barbados dollars of debt (about 7.5 billion US dollars). Disclosure of information about the current level of debt has led to an increase in the debt-to-GDP ratio from 137% to 175%. This is the fourth value in the world after Japan, Greece, and Sudan.

Given the current condition of the government finances, the new government had no other choice than to ask the IMF to facilitate debt restructuring. Christine Lagarde has confirmed the readiness of the IMF to provide financial assistance; the IMF mission will arrive at the island in the near future.

The financial condition of the state began to deteriorate after the global financial crisis, the consequence of which was the decline of the country's tourism industry.

According to Cbonds, excluding the disclosure of the true level of debt, there are 47 issues in circulation totaling 4.425 billion US dollars. The coupon rate for issues nominated in USD fluctuates in the range of 4.25-7.75% per annum.

Issue: Barbados, 6.625% 5dec2035, USD

StatusDefaultCountry of riskRedemption (offer)VolumeIssue Rating (M/S&P/F)
outstandingYesBarbados12/05/2035255,000,000 USDD/Caa3/-

Company: Barbados

Full company nameBarbados
Country of riskBarbados

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