April 13, 2016 8:51 am
Cuba’s creditors hire sovereign expert for debt talks
Creditors seeking to do a deal with Cuba over its defaulted private debt
have appointed an expert on sovereign debt to co-ordinate their work and
begin dialogue with its government.
The designation of Rodrigo Olivares-Caminal, a professor at Queen Mary
University of London, is the latest sign that investors are preparing
for Cuba to return to the financial markets as it buries the hatchet
with the US over its cold war embargo.
In the last year, Cuba’s socialist leaders have been doing deals with
other governments to restructure debts it has not paid for decades,
since a default in the 1980s.
To access international borrowing markets again, the Caribbean island
will also eventually need to agree terms with its so-called “London
Club” private-sector creditors.
Mr Olivares-Caminal has been appointed as co-ordinator by a group of
commercial creditors that formed last year as Cuba finalised agreements
with several official lenders, such as Russia, Mexico and members of the
Paris Club of creditor nations.
The group, which says it represents 40 per cent of private-sector claims
on Cuba, currently comprises CRF Ltd, Adelante and Stanford Trust —
three specialist funds in exotic sovereign debt.
“We are in the very early stages of reaching out to stakeholders,” Mr
Olivares-Caminal said. “The Paris Club is really the last step before
engaging with London Club creditors.”
Mr Olivares-Caminal will be responsible for engaging with other holders
of the Cuban debt, which has become fragmented and hard to track since
the default and is rarely traded.
As a Spanish-speaking national of Argentina, with experience of advising
governments on restructuring debt and working for the United Nations, Mr
Olivares-Caminal may also be well-placed to talk to the Cuban
government, people familiar with the matter added.
Official government statistics have not completely disclosed the size of
the private-sector debt for years. Cuba owes the creditors in Mr
Olivares-Caminal’s group $1.2bn, not including considerable postdated
interest accumulated after the default, according to estimates.
Cuba declared a moratorium in 1986 on commercial banks and western
governments that lent it money for development projects in the previous
In 2011 the Cuban government changed policy, seeking to reprofile the
debt and secure new loans.
The deal with Paris Club countries at the end of last year, under which
it paid $2.6bn in arrears in return for $4bn of debt relief, marked its
biggest success so far.
“I reiterate the willingness of the Cuban government to honour the
commitments resulting from this and other agreements achieved during the
rescheduling of our debt with other states and their private sector,”
President Raúl Castro said in a speech in December.
With Mr Castro stepping down as president in 2018 and some historical
allies of the country such as Argentina now under market-friendly
governments, private creditors see a window of opportunity in the next
few years to strike a deal, according to people familiar with the matter.
Source: Cuba’s creditors hire sovereign expert for debt talks – FT.com –