Suriname Nears Key Restructuring Deal After Years in Default

(Bloomberg) -- Suriname’s creditors are nearing a deal with the South American nation’s government to restructure $675 million of bonds, according to people familiar with the matter. 

An agreement, which could result in losses in a range of about 25% to 30% for investors, stands to finally lift the country out of a years-long default, said the people who asked to not to be name because the matter is private. It is also likely to help as the nation looks to resume a program with the International Monetary Fund.

The deal will potentially involve an instrument linked to oil royalties that could help compensate bondholders for losses accepted in a restructuring, the people said. 

While the final terms have yet to be agreed, it’s a major step for Suriname. The former Dutch colony defaulted three times during the pandemic, per Fitch Ratings’ criteria, with a restructuring deal elusive. 

A representative for the creditors’ committee declined to comment. Neither a government spokesperson nor financial advisors to the government immediately responded to messages seeking comment. The IMF was not immediately available to comment.

With a bondholder deal close, Suriname is also accelerating negotiations with China, one of the people said. As part of the latest restructuring proposal, investors would potentially receive a new bond with a gradually increasing coupon-payment structure, the person said. 

A chasm emerged during earlier negotiation between finance officials and bondholders, who wanted access to potential future oil royalties from an offshore basin that driller Apache Corp. says is “the most watched” on the globe.

Now, progress is in focus. The nation is looking to lock in debt agreements and resume an IMF program that would provide a needed source of financing. In late 2021, the sides reached a three-year agreement that gave the government access to around $690 million. But it was halted last year after the IMF was unable to complete reviews. 

The sides have been in talks over the last year about bringing the program back, Nigel Chalk, the IMF’s acting director of Western Hemisphere Department, said in a press briefing Thursday.

The nation’s notes due in 2026 have been quoted at around 65 cents on the dollar, while the bonds due later this year are about 73 cents, according to indicative pricing compiled by Bloomberg. 

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