It is the sensible thing to do while you focus on the rebuilding effort.
Those were the words of a former Permanent Secretary in Grenada as he made reference to the decision taken by the Dickon Mitchell-led Congress administration to approach bond holders to seek a deferral on payments in light of the devastation caused by Hurricane Beryl.
According to the retired senior public officer, the government is simply asking the bond holders to give them some breeding space in order to use the same money earmarked for them to rebuild the island.
He noted that this is vastly different from the position taken under the former New National Party (NNP) government of Keith Mitchell to request “a haircut” from payments due to creditors including the state-owned National Insurance Scheme (NIS).
Following is the official release from the Congress government directed to Bondholders:-
Grenada’s 7.0% Bonds due 2030 (ISIN: USP48863AE77)
Notice to Bondholders – Deferral Claim following Hurricane Beryl
We refer to the U.S Dollar 7.0% Bonds due 2030 (the “Bonds”) issued by the Government of Grenada (“Grenada”) pursuant to an indenture (the “Indenture”) dated as of November 12, 2015, between Grenada and The Bank of New York Mellon, as trustee (the “Trustee”), as amended from time to time.
Capitalised terms used but not defined herein shall have the meaning ascribed to such terms in the Indenture or the terms and conditions of the Bonds (the “Conditions”) as the case may be.
Pursuant to paragraph 18 of the Conditions, Grenada may elect to defer payment of the Deferred Payment Amount on a Deferral Date following the occurrence of a Caribbean Tropical Cyclone Event in respect of which a Policy Payment has been made to Grenada.
On July 1, 2024, Hurricane Beryl, a Category 4 storm, made landfall and caused catastrophic damage to Grenada (the “Event”). The damage and casualties from the hurricane were widely reported in the news.
On July 16, 2024, the Caribbean Catastrophe Risk Insurance Facility (CCRIF) has made a US$44 million policy payment to Grenada as a result of the damage following Hurricane Beryl.
Grenada confirms that:-
(i) the CCRIF Policy is in full force and effect, and CCRIF has issued a written report confirming that the Event is an Insured Event in respect of which a Policy Payment has been made to Grenada;
(ii) since the Issue Date, none of the Ceding Percentage, the Coverage Limit or the Exhaustion Point applicable to tropical cyclones has been reduced, unless it has been reduced by CCRIF and CCRIF has declined a request submitted by Grenada to CCRIF to maintain such Ceding Percentage, Coverage Limit or Exhaustion Point, as the case may be; and
(iii) the Modelled Loss to Grenada from the Event is greater than U.S.$15 million.
Grenada has elected to make a Deferral Claim as a result of the Event. As the Modelled Loss is greater than U.S.$30 million, the Deferral Dates as a result of the Event include each of the next two consecutive Payment Dates following the submission of the Deferral Claim (i.e., the payment dates falling on November 12, 2024 and May 12, 2025).
The portion of a Deferred Payment Amount that is comprised of interest will be converted into principal on and with effect from the relevant Deferral Date. Where such interest is converted into principal, the principal amount of the Debt Securities shall be increased in the amount of such deferred interest.
White Oak Advisory acted as the financial advisor, and Cleary Gottlieb Steen & Hamilton LLP acted as the legal advisor to the Government of Grenada. Questions regarding this notice may be addressed to Mike Sylvester, Permanent Secretary, Ministry of Finance, Grenada at ps@mof.gov.gd.