The Government of Barbados announced on Friday that it has launched an offer to exchange the vast majority of Barbados dollar-denominated debt owed by the Government of Barbados and certain public sector obligors for new debt instruments issued by the Government of Barbados. The launch of the exchange offer follows the Government’s 1 June 2018 announcement of its intention to seek a comprehensive restructuring of the country’s unsustainable debt burden.

In making its announcement, the Government confirmed that the following Barbados dollar-denominated instruments fall within the scope of the exchange offer (“Affected Debt”):  

• Treasury Bills
• Treasury Notes
• Debentures
• Loans and bonds owed by the Government
• Loans and bonds owed by state-owned enterprises (SOEs) and other entities that receive transfers from the state budget
• Certain arrears owed by the Government and its public sector

 Savings Bonds do not fall within the scope of the exchange offer and will therefore not be restructured.  All holders of the Affected Debt will shortly receive letters with full details of the exchange offer, together with participation instructions. The exchange offer will be open to holders of the affected debt until 5:00pm on Friday, 28 September 2018.

(Bloomberg) The government of Barbados has reached a deal of about $300 million with the International Monetary Fund as it seeks to restructure one of the world’s highest debt loads. The island nation would receive an initial tranche of about $50 million as soon as October after the IMF board approves the deal, Prime Minister Mia Mottley said Friday in a joint press conference in Bridgetown with the IMF’s Bert van Selm. Mottley took office in June and promptly announced plans to restructure the roughly $600 million in outstanding dollar bonds.

In the last decade, the economy of Barbados has been caught in a cycle of low growth, widening fiscal deficits and increasing debt Mottley said Friday in a joint press conference in Bridgetown with the IMF’s Bert van Selm. International reserves have fallen to about $240 million dollars, which is below reserve adequacy levels, while government debt has become unsustainable. The yield on nation’s dollar bonds maturing in 2035 have fallen to 13.49 percent from 15.95 percent on June 4, after the government announced its intentions to restructure.

(CNN Money) The current decline being experienced in Emerging Markets has its origin in Washington. The currencies of Emerging Markets such as the Argentine Peso, Brazillian Real and South African Rand plunged as the US Federal Reserve steadily raised interest rates and President Donald Trump's trade crackdown added fury to the fire. Economists are saying that the trouble could spread, infecting other emerging markets and even Wallstreet, similar to what happened two decades ago during the Asian Financial Crisis. "There is a fear of contagion, similar to 1997-1998," said Michael Arone, chief investment strategist at State Street Global Advisors. 

That has already started to happen. Indonesia's stock market plunged nearly 4% on Wednesday. India's rupee recently tumbled to a record low against the US dollar and Brazil's real is also down sharply. The iShares MSCI Emerging Markets ETF(EEM) has slumped 11% this year, trading near a 14-month low. China's Shanghai Composite has tumbled 18%, while the Turkish lira has crashed by nearly half against the USD and last week Argentina increased its interest rate to 60%. 

(Bloomberg) Trinidad and Tobago Prime Minister Keith Rowley delivered a national address on a change to state-owned oil and gas company Petrotrin, a transcript of which was released by his office Monday. He stated that closing Point-a-Pierre refinery is the “only commercially sound and viable option and that refining assets will be placed in separate companies for opportunity attention. He also stated that the Oilfields Workers’ Trade Union “will be given the first option to own and operate it on the most favorable terms". However, OWTU President Ancel Roget, Have expressed that the union has no intentions of owning the refinery. The President of the union stated that "they are patriots and that the refinery belongs to the people, it does not belong in the hands of a private owner, even if that owner is the union”. 

(Bloomberg) Emerging-market assets can’t catch a break, even though the most vulnerable countries have attempted to protect their currencies, the rising US dollar continues to influence their decline. MSCI Inc.’s index of currencies dropped for a fifth time in six days, putting the gauge on course for the lowest close in more than a year. The rand extended declines after data showed the economy entered a recession in the second quarter. The LIRA also fell due to concerns that the Turkish central bank will disappoint at its rate meeting next week, despite their promise on Monday to reshape the country's monetary policy stance. Argentine bonds reversed earlier gains even after President Mauricio Macri’s announcement of emergency measures to stem the current crisis in the country. 

Meanwhile, the dollar extended its advance to a fourth day as U.S. President Donald Trump threatened to ramp up a trade dispute with China, with an announcement of tariffs on as much as $200 billion in additional Chinese products as soon as Thursday. With U.S. rates rising, investor worries over idiosyncratic risks in emerging markets have been deepening, including Argentina’s fiscal woes, Turkey’s twin deficits, Brazil’s contentious elections, and South Africa’s land-reform bill.

(Bloomberg)  Bondholders in Digicel Group Ltd. should expect the phone company to decide in the near future on how to address its $6.8 billion debt load amid an earnings slump, according to people with knowledge of the matter. Digicel’s notes rose.

Executives told investors on a call Thursday that the company is reviewing a number of options, including so-called liability management exercises at the Digicel parent company level, said the people, who asked not to be identified because the call was private. Chief Financial Officer Ray Leclercq said decisions may be made shortly. Borrowers can use liability management to refinance, repurchase or modify existing debt, often to either reduce or extend the obligations. A company spokesman declined to comment.

The carrier founded by Irish billionaire Denis O’Brien said Wednesday that Leclercq will leave in September after a year in the post. Digicel also reported a decline in first fiscal quarter earnings, according to a report reviewed by Bloomberg News.

O’Brien has used high-yield debt to turn his mobile-phone carrier into a global operation with customers spread from El Salvador to Vanuatu. Investors have grown increasingly concerned after the company shelved a planned share sale in New York that was in part designed to pay down debt more than two years ago.

Digicel bonds were among the biggest gainers in the U.S. high-yield market on Thursday afternoon in New York. Its $2 billion notes due September 2020 added 4.4 cents on the dollar to 71.25 cents, according to Trace bond trading data. The debt’s retreat before today had pushed their yield to more than 30 percent. The April 2022 notes advanced 5.35 cents to 62.85 cents.

(Bloomberg) -- Canada’s foreign minister expressed support for changes to Nafta’s rules for car content as talks resumed between the U.S. and its northern neighbor to update the trade accordd. 
“Rules of origin in cars is an incredibly complicated issue, but we had reached a high-level agreement with the U.S. in the spring, and we are encouraged by the progress they made with Mexico this summer,” Canadian Foreign Minister Chrystia Freeland told reporters Wednesday on her way into meetings with U.S. Trade Representative Robert Lighthizer. “Mexico has made some significant concessions which would be really good for Canadian workers,” she told reporters outside the USTR offices in Washington.

Talks to update the North American Free Trade Agreement resumed Wednesday in Washington with a focus on dairy as the U.S. pressures Canada to strike a deal by Friday, a U.S. official familiar with the negotiations said. The Trump administration plans to inform Congress by the end of the week that President Donald Trump intends to sign a trade deal with Mexico in 90 days to replace Nafta, and it’s urging Canada to join it. This week’s Nafta showdown has Canada under the gun to either strike a deal both can live with, cave to Trump’s pressure tactics or dig in and see what the U.S. will do.

(Bloomberg) Digicel Group Ltd.’s service revenue fell 7% to $546 million in 1Q, according to a release seen by Bloomberg. The company announced the departure of CFO Ray Leclercq in a
separate statement.

* Earnings Before Interest Tax Depreciation and Amortization (EBITDA) is down 2% to $249Mn
* The group's $100Mn revolver was fully drawn at the quarter ended June 30
* The company  is 6.75x leverage
* Cash on hand was $158Mn
* Operating cash flow was $209Mn, down 6% YoY
* Total revenue declined 6% to $565Mn, with service revenue declines offset by a 6% gain in handset/equipment revenue
* Digicel term loan down to 92.5/94.5 from 95.5/96.5, according to a person with knowledge of the trading
* A representative for Digicel declined to comment
* Company scheduled earnings conference call 10 a.m. EST Thursday

(Bank of Jamaica Press Release) Bank of Jamaica announces its decision to hold the policy interest rate (the rate offered on overnight placements with Bank of Jamaica) unchanged at 2.00 per cent. This decision reflects the Bank’s assessment that inflation, currently below target, will rise towards the lower end of the target of 4.0 per cent to 6.0 per cent by the March 2019 quarter and approach the middle of the target range thereafter.

The Bank’s outlook for inflation for the remainder of 2018 and the first part of 2019 is largely predicated on an expected normalization (increase) in agricultural prices, oil prices remaining elevated and higher domestic GDP growth, the latter driven in part by the accommodative monetary conditions induced by the central bank over the past year. In the medium term, the Bank’s inflation outlook continues to reflect a gradual acceleration in economic activity (growth in real GDP). However, the path for inflation continues to reflect some slack in the economy (ie, projected GDP growth is less than the Bank’s estimate of potential GDP growth) and therefore continued risk of inflation falling below the baseline projection.

The decision to maintain the policy rate, following downward adjustments of 100 basis points earlier this year, is in the context of the signs that have emerged of a pick-up in the rate of expansion in private sector credit. If this acceleration in private sector credit growth continues, the resulting increase in economic activity will support inflation returning to the target of 4.0 per cent to 6.0 per cent with greater certainty. However, Bank of Jamaica is closely monitoring these credit conditions and will make further cuts to the policy rate if required.

Macroeconomic indicators continue to be positive. Net international reserves are at healthy levels and the current account of the balance of payments, while projected to widen, will remain at sustainable levels. Market interest rates are also at record lows and employment continues to expand.  The next policy decision announcement date is 02 October 2018

(Bloomberg) -- Petrotrin, the state-owned oil company of Trinidad and Tobago, is closing its refining business to focus on crude exploration after amassing losses, debt and overdue taxes in past years.  The producer is cutting 1,700 refining jobs and will be left with about 800 workers in its exploration and production business following losses of about 8 billion Trinidad and Tobago dollars ($1.2 billion) over the past five years, Petroleum Co. of Trinidad and Tobago Ltd. said Tuesday. The company was no longer producing enough to efficiently run its 168,000-barrel-a- day refinery in Pointe-a-Pierre, Chairman Wilfred Espinet said in an emailed statement.   “With the termination of the refining operations and the redesign of exploration and production, Petrotrin will now be able to independently finance all of its debt and become a sustainable business,” Espinet said.