Grenada to make debt payment to international creditor due 12 May 2020

by Linda Straker

Prime Minister, Dr Keith Mitchell, has confirmed that while discussions are ongoing with an international creditor, Grenada will make a debt payment to bondholders which is due today, 12 May 2020.

“We will be making the payment so we won’t default,” Dr Mitchell said via text message in response to a question about what the island will be doing while it awaits a formal response to the moratorium request.

In a letter to Christopher Olsen, Vice President of The Bank of New York Mellon, Dr Mitchell is seeking an 8-month suspension on its obligation on the holders of its 2030 bonds as per the terms of the Covid-19 G20 initiative.

“As you are undoubtedly aware, our world is grabbling with the unprecedented impact of the Covid-19 pandemic with both devastating mortality and socio-economic impact,” Dr Mitchell said in the letter which is dated 4 May 2020.

The bond in question was issued in 2017 for about $100 million and matures in May 2030 and carries a 7% coupon. Amortization payments have reduced the outstanding principal to $94.3 million.

In a national address on Sunday night, Dr Mitchell informed citizens that from projections for an eighth consecutive year of growth, government is now facing the stark reality of negative growth, triggered largely by the significant impact on tourism, construction and education. “This has resulted in a drastic decline in government revenue. In April for example, the combined revenue collection by Customs and Internal Revenue Division dropped by about $30 million compared to that of 2019; a decline likely to be replicated across our main revenue-generating departments over the next few months,” he said.

He then disclosed that government is therefore utilising its reserves and seeks international help to finance any deficits and bring relief to its citizens, while continuing the fight against the deadly virus. “Already, we have attracted funding from the International Monetary Fund, the World Bank, the European Union, the Government of India, the Eastern Caribbean Central Bank and the Caribbean Development Bank among others. We continue to look at other sources for grant and soft loan financing, as well as explore options for debt relief.”

Last week Wednesday, the Prime Minister said that government is applying to the international community for a suspension on EC$60 million in debt payment that is scheduled to be paid to creditors covering the period of April and December 2020. The moratorium request with The New York Bank Mellon will accumulate US$15,438,875. The principal is US$8,983,312 while the interest is US$6,455,563.