Bonds News

Suriname seeks to defer payments on $675 million in debt

LONDON, Nov 16 (Reuters) - Suriname’s government has asked creditors for a payment deferral on its two bonds, which total $675 million in size, in what analysts said could be a prelude to a broader debt restructuring.

The government of the South American nation announced the launch of a consent solicitation for its two bonds, due in 2023 and 2026, in a statement on Saturday. The consent solicitation expires on Nov. 23.

The move had been expected after Suriname said late last month that it wanted to make use of a 30-day grace period on its dollar-bond coupon payments due on Oct. 26 to talk to creditors about its debt sustainability issues.

“Assuming Suriname obtains the approval for the requests specified in the consent solicitation, there will be a deferral of certain interest and principal payments otherwise falling due in 2020,” the government said in the statement.

The debt service suspension will give the government breathing space to work towards an agreement with the International Monetary Fund on a funding programme, initiate debt relief talks with certain foreign currency creditors and help preserve foreign currency to manage the fallout from the COVID-19 crisis, it said.

“The standstill buys time for the authorities to secure an IMF programme, but is likely a prelude to a more comprehensive restructuring,” Stuart Culverhouse, head of sovereign and fixed income research at Tellimer, wrote in a note.

Suriname’s government is the latest to struggle with its debt in the wake of the pandemic, with Zambia becoming Africa’s first sovereign pandemic-era default.

In anticipation of a gearing up of a showdown with the government over the debt, holders of Suriname’s dollar-denominated bonds said earlier this month they had formed a creditor committee and welcomed talks with the government on its debt situation. (Reporting by Tom Arnold Editing by Paul Simao)