Research Update: Republic of Suriname US$125 Million Bond Due December 2023 Downgraded To 'D' From 'CC'; Other Ratings Affirmed

On Nov. 30, 2020, bondholders of the Republic of Suriname's US$550 million bonds due in October 2026 and US$125 million bonds due in December 2023 announced their support of a consent solicitation request issued by the government to obtain short-term relief from certain debt service obligations and thereby confirm a debt restructuring with the goal of making the country's debt sustainable. In line with our ratings definitions, we are lowering our issue-level rating on the US$125 million December 2023 bond to 'D' (default) from 'CC'. This follows the Government of Suriname's failure to make an interest payment on its US$550 million 2026 bonds, and our lowering of the issue-level rating on those bonds to 'D' and the long-term foreign currency

...Key rating factors Score Explanation Institutional assessment 6 Weak political institutions are resulting in an uncertain policy environment in periods of stress resulting is a diminished capacity to maintain timely debt service Debt payment culture is weak, demonstrated by the recent bond restructuring. Economic assessment 6 Based on GDP per capita as per Selected Indicators in Table 1. Weighted average real GDP per capita trend growth over a 10-year period is below sovereigns in the same GDP category. Concentrated economy with gold mining and related manufacturing representing more than 20% of GDP. Material revisions to economic and fiscal data are common and add uncertainty. External assessment 6 Based on narrow net external debt and gross external financing needs as per Selected Indicators in Table 1. There is a risk of marked deterioration in the cost of or access to external financing due to financial sector operating in a more difficult environment. The country has constraints on...

Research Update