Suriname Offers Bondholders $675 Million Exchange for New Notes
Suriname’s Proposal for Bond Exchange
Suriname has made a late-night offer to bondholders, proposing to exchange $675 million of dollar bonds for new notes. This offer comes after the country reached a deal with its bondholders in May, marking the next step in negotiations.
Details of the Offer
The Surinamese government has extended an offer to holders of debt due in 2023 and 2026. They are being given the opportunity to swap their existing notes for new ones due on July 15, 2033. These new notes will carry an annual interest rate of 7.95%.
Introducing Value Recovery Instruments (VRI)
In addition to the bond exchange, Suriname plans to issue new notes with payouts linked to the government’s ability to secure at least $100 million in oil royalties from Block 58, an offshore reserve. These new instruments, known as value recovery instruments (VRI), will provide investors with an added layer of security.
Allocation of Royalty Income
Once the government reaches the $100 million milestone, Suriname will allocate 30% of its annual royalty income from Block 58 to make quarterly payments on the new notes. This arrangement will continue until the notes mature in 2050, ensuring a steady stream of income for bondholders.
Expiration of the Offer
Bondholders have until 5:00 p.m. New York time on November 3, 2023, to consider and accept the offer. The government has set a deadline for the exchange, urging bondholders to make their decision within the specified timeframe.
Support from Debt Holders
The committee of debt holders, including Franklin Templeton, Eaton Vance, GMO, Greylock Capital, and T. Rowe Price, has expressed its support for the offering. This endorsement signifies confidence in Suriname’s proposal and strengthens the country’s position in negotiations.
Suriname’s Economic Progress
In September, the International Monetary Fund (IMF) approved the third review of Suriname’s program, providing over $600 million in financial assistance. This funding demonstrates the IMF’s confidence in Suriname’s efforts to address economic challenges and implement necessary reforms.
Debt Restructuring and Bilateral Talks
Suriname is actively working on restructuring its debt with bilateral creditors. In the coming weeks, the country’s foreign minister will visit Beijing for talks with Chinese officials. These discussions aim to strengthen economic ties and explore potential solutions to Suriname’s debt situation.
Suriname’s latest offer to bondholders marks a significant step in the country’s ongoing efforts to manage its debt and secure a sustainable financial future. With the support of debt holders and international organizations like the IMF, Suriname is taking proactive measures to strengthen its economy and ensure the well-being of its citizens.
