ST. GEORGE’S, Grenada, CMC – Grenada Tuesday announced that it will hold a virtual meeting for its 2030 international bondholders on Friday. Grenada became the first country in the world to use a “hurricane clause” in a government bond. This unique feature allows authorities to postpone debt payments after a major natural disaster.
The Dickon Mitchell government last month said it would defer more than US$$17 million in total payments to government bondholders because of the devastation caused to the island following the passage of Hurricane Beryl on July 1, leaving damage estimated at US$30 million.
According to a statement posted on the Ministry of Finance website, the impact of the hurricane, the activation of the Hurricane Clause, and the general outlook of the economy will be the topics of discussion on Friday.
It said all interested investors must register to attend the event by Wednesday and that the registration form is available on the website. That also explains that Grenada’s seven percent bonds due 2030 with the code ISIN: USP48863AE77 will experience a deferral payment because of the hurricane.
“Grenada has elected to make a Deferral Claim due to the Event. As the Modelled Loss is greater than US$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),” said the statement.
“The portion of a Deferred Payment Amount 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,” it added.
It was issued by the Grenada government under an indenture dated as of November 12, 2015, between Grenada and The Bank of New York Mellon as trustee. Grenada may elect to defer payment of the Deferred Payment Amount on a Deferral Date following a Caribbean Tropical Cyclone Event regarding which a Policy Payment has been made to Grenada.
The statement said that on July 1, 2024, Hurricane Beryl, a Category 4 storm, landed and caused catastrophic damage to Grenada. The damage and casualties from the hurricane were widely reported in the news, and on July 16, 2024, the Caribbean Catastrophe Risk Insurance Facility (CCRIF) made a US$44 million policy payment to Grenada.
The statement said that Grenada confirms that the CCRIF policy is in full force and effect. 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.”
The statement said that since the issue date, none of the Ceding Percentage, the Coverage Limit, or the Exhaustion Point applicable to tropical cyclones has been reduced unless CCRIF and CCRIF have reduced it has declined a request submitted by Grenada to CCRIF to maintain such Ceding Percentage, Coverage Limit or Exhaustion Point, as the case may be.
The statement said the modeled loss to Grenada from the Event is more significant than US$15 million.
White Oak Advisory, which is an independent financial advisory firm providing specialist, high-level, and conflict-free advice to governments and other clients on matters relating to sovereign finances and sovereign debt, acted as the financial advisor, and Cleary Gottlieb Steen & Hamilton LLP acted as the legal advisor, to the Grenada government with respective to the 2030 bonds, the ministry said.
and then 