Suriname Launches Terms of $675 Million Debt Restructuring

• Suriname offered to swap $675 million of dollar bonds for new notes, including those linked to oil royalties, as the South American nation wraps up the final steps of its debt restructuring.
• The government invited investors of debt due in 2023 and 2026 to exchange their holdings for new 10-year bonds with a 7.95% interest rate, according to a Monday statement.
• Suriname will also issue notes that pay out after the government receives at least $100 million of oil royalties from an offshore reserve known as Block 58. Once that revenue threshold is reached, officials will allocate 30% of annual royalties to make payments on the instrument until it matures in 2050.
• This is the latest step in a restructuring process that’s been watched as a potential blueprint for other commodity-producing nations trapped in painful and protracted defaults.
• A committee of bondholders said they backed the deal, which will help the nation clear its default. The new security, dubbed a value recovery instrument, “is structured to ensure that Suriname will benefit from a significant majority of anticipated oil production proceeds while enabling noteholders to receive adequate repayment of their claims in a timely manner,” the group wrote in an email statement.
• The committee includes Franklin Templeton Investment Management, Eaton Vance Management, Grantham Mayo Van Otterloo & Co., Greylock Capital Management and T. Rowe Price Associates. Its members collectively hold more than the 75% threshold in each of the notes to trigger the collective action clauses and apply the restructuring terms to all outstanding notes, they said.
• Suriname has lingered in default for more than three years before striking an agreement with creditors in May. Its dollar bonds have surged 21% this year, among the top performers in emerging markets.

(Source: Bloomberg)