Barbados PM 'optimistic' about restructuring

Barbados PM 'optimistic' about restructuring

Bonds Economy & Policy Barbados

Barbados' Prime Minister Mia Mottley says she is "optimistic" the island nation will reach an agreement with international bondholders to restructure its debt.

In an interview with LatinFinance, Mottley said talks were continuing with external creditors but did not give a timeline for when an agreement might be reached.

"The most important thing is the conversation is taking place," she said. "I am optimistic. We are operating in utter good faith."

Last year, Barbados suspended payments on its foreign debt and launched a domestic debt exchange. The move came as Barbados' public debt had reached roughly 175% of GDP and the country had around $220 in international reserves — just enough to cover seven weeks of imports. Some 20% of Barbados' debt is in the hands of foreign bondholders.

The government has not made public how it will handle a restructuring with external creditors. A group of international bondholders, led by US investment management firm Eaton Vance, has demanded Barbados honor its bond payments in full, according to market sources. A spokesperson for Eaton Vance declined to comment.

Mottley said the government was approaching the debt restructuring talks with a key objective. "The north star for us is bring our debt back to a sustainable level, which is a 60% debt-to-GDP ratio by 2033."

A government official noted Barbados was in no rush to map out a timeline for resolving the restructuring, noting that the country does not need to borrow money for at least four years. "For now, we can focus on growth," the official said.

In October, the IMF agreed to provide a four-year loan for $290m to Barbados. The IDB has granted the government a $100m loan and the Caribbean Development Bank (CBD) has extended a $75m loan

Barbados carried out a debt swap for 2018, 2020, 2022, 2025 and 2026 notes in October last year.

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