St Kitts and Nevis debt swap draws 96.8 pct acceptance

NEW YORK, March 15 Thu Mar 15, 2012 7:53pm EDT

NEW YORK, March 15 (Reuters) - The Caribbean nation of St Kitts and Nevis said on Thursday 96.8 percent of investors holding certain classes of its sovereign bonds agreed to a debt-exchange offer that will see $150 million in outstanding obligations restructured.

The debt's covenants contain collective action clauses (CACs) that will be triggered, the government said in a statement distributed by its financial advisor, White Oak Advisory LLP. The CACs force the remaining 3.2 percent of bondholders to accept the deal's terms.

"The outstanding results of the exchange offer will provide extensive and permanent levels of debt relief to our country," Denzil Douglas, who serves as both the Prime Minister and Finance Minister, said in the statement.

St Kitts and Nevis, a two-island nation that is a member of the Eastern Caribbean currency union, has total debt outstanding of EC$2.9 billion (Eastern Caribbean dollars), or just over US$1 billion. The currency is pegged at 2.67 per one U.S. dollar.

This swap agreement encompasses just $150 million out of the $750 million subject to its global debt-restructuring exercise, which includes domestic bank debt, bilateral debt and intra-government debt. Approximately $250 million, the rest of its debt load, is made up of multilateral debt and Treasury billions, neither of which are subject to the restructuring, White Oak said.

St Kitts and Nevis, with a population of about 50,000 and Queen Elizabeth II as its head of state, had an overall debt-to-gross domestic product ratio of close to 200 percent, putting it above the 160 percent level for Greece before its own debt swap initiated in the last week.

"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," the statement said.

The New Discount Bonds, partially guaranteed by the Caribbean Development Bank, cut the face value by 50 percent with the balance repaid over 20 years. The coupon is set at 6 percent for the first four years and then steps down to 3 percent thereafter.

The New Par Bonds have a final maturity of 45 years, inclusive of a 15-year grace period on principal with interest fixed at 1.5 percent throughout the life of the issue.

Those bondholders who were forced to accept the deal because they did not tender in the exchange will automatically receive New Discount Bonds when the transaction settles.

The government's legal advisor is the firm, Clifford Chance.

FILED UNDER: