Grenada bondholders form committee after missed coupon payment

NEW YORK Fri May 3, 2013 2:27pm EDT

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NEW YORK May 3 (Reuters) - Bondholders of Grenadian sovereign debt announced on Friday they formed a committee to address the Caribbean nation's decision to restructure its public debt that resulted in the government's missing a coupon payment in March.

Financial advisor BroadSpan Capital issued a press release stating that "holders of more than 75 percent" of the U.S. dollar-denominated and East Caribbean dollar-denominated bonds formed a steering committee and a broader ad-hoc bondholders' committee to raise their concerns with the government.

The Grenada government, in March, said it did not have the resources to make coupon payment on the U.S. dollar-denominated bond that matures in 2025, Thomson Reuters IFR reported on March 11. The payment was due on March 15 and no payment was made within the 30 day grace period, "and the bonds are now in default," BroadSpan said in Friday's statement.

Standard & Poor's, on March 12, lowered its sovereign credit rating for Grenada to SD, or Selective Default, from CCC-minus, citing the government's decision.

At the time, S&P said Grenada did not expect to have the funds the pay the coupon during the grace period.

"The Committee took note of the GOG's (Government of Grenada) stated commitment to a comprehensive and collaborative process, and believes that any request for support from commercial creditors should be matched not only by support from multilateral and bilateral lenders, but also by sound policy measures on the part of the GOG," BroadSpan's Mike Gerrard said in the statement.

IFR, citing a prior government statement, reported that last year Grenada was forced to use the grace period to buy some time to make another payment. At the time it borrowed $4.4 million from a local source on a short-term basis, IFR said.

Coupons on the 2025 jumped from 2.5 percent to 4.5 percent in September 2011 and will step up again to 6 percent in September this year. The coupon will increase in 2015 and 2017, and hit a peak of 9 percent in 2018, IFR reported.

The committee's statement said it has asked the government to confirm its willingness to directly pay for reasonable fees and expenses incurred during the negotiations, including fees related to financial and legal advisors as well as out-of-pocket expenses.

Grenada's 2025 U.S. dollar-denominated bond is currently showing bid/ask price spread of 34.00/36.00 with a yield of 24.328 percent, according to Thomson Reuters data.

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