Newsroom: Article

Emerging Market De(bt)velopments

Liberia – Evaluating a potential debt buy-back programme
Gabon – Paris Club early repayment / buy-back

Liberia - Evaluating a potentian debt buy-back programme
Early 2006, the government of President Ellen Johnson Sirleaf assumed office in Liberia. She inherited a country with a broken economy and basic infrastructure. Since, the country has recovered significantly, but there is still a long way to go. As part of the economic and fiscal reconstruction of the country, the government of Liberia has made the first steps towards dealing with its debts from the past and is evaluating the possibility of a debt buy-back programme for its commercial creditors. Liberia’s external debt as per ultimo 2005 – before any debt cancellation has been applied – is estimated at between $3.7bn and $4.1bn. Of this amount, approximately $1.5bn consists of commercial debt, the remainder being split between multilateral debt ($1.6bn) and official bilateral debt. These figures imply a 600% debt-to-GDP ratio and a 5000% debt-to-exports ratio (2005 figures), clearly indicating unsustainable debt levels at that time (albeit that these figures will improve substantially with the economic redevelopment of the country and increasing exports).
The country is currently in the process of reaching a decision point under the enhanced HIPC programme (Heavily Indebted Poor Countries) with multilateral and bilateral creditors, after which intermediate debt cancellation (90% of debt service) will be granted until the completion point is reached. At completion point, 90% of the stock of debt is typically cancelled, with the requirement that Liberia will seek comparable debt treatment from its commercial creditors. A debt buy-back offer significantly above 10% is therefore unlikely and may still take considerable time to materialise. The current secondary debt prices in the range of 4% to 8% may offer an interesting return, but commensurate to the significant risk still involved.

Holders of Liberian debt are invited to contact us.

Gabon – Paris Club early repayment / buy-back
The Paris Club and Gabon have reached agreement on an offer by Gabon to make an early repayment on certain Paris Club debt outstanding. The face value of Gabon’s debt with Paris Club creditors amounts to approximately $2.3bn. The early repayment offer excludes debt granted under Official Development Assistance. It includes the uninsured portions of private creditors that were insured with their national export credit agencies and had seen their uninsured portions restructured within the Paris Club framework in the past. Each Paris Club creditor country may still decide individually whether to accept Gabon’s offer, which entails a buyback/ early repayment at market value of the eligible debt. The actual early repayment is scheduled to take place during December 2007 and January 2008.

For Liberian or Gabon debt solutions, brokerage requests or more information on specific debts, debt conversions and restructurings, please contact:

Omni Bridgeway Emerging Markets BV
Tobias Asserlaan 5, 2517 KC
The Hague, The Netherlands.
Tel: (+31) 70 3384343, Fax: (+31) 70 3523469
Raymond van Hulst on vanhulst@omnibridgeway.com
Heleen Rijkens on rijkens@omnibridgeway.com

Attached please find a sample of emerging market debt pricing. Please note that the included prices are sample prices. A copy of the latest prices can be obtained by sending your contact details to info@omnibridgeway.com.
If you are interested in receiving the prices on a bimonthly basis, please send your request to info@omnibridgeway.com.