Three bond restructurings totaling about $9.7 billion in the Caribbean this year are failing to ignite economic growth and may not help the region avoid more defaults, according to Moodys Investors Service.
The bond swaps this year didnt go far enough to fixing the Caribbeans unsustainable mix of debt and deficits, Warren Smith, the president of the Caribbean Development Bank, said May 22. Jamaica and Belize, which restructured about $9.5 billion in local and global bonds this year for the second time since 2006, face a high probability that they will default again, Moodys said in a May 20 report.
Among Caribbean island economies, only the Bahamas is expected to grow more than 1.5 percent this year compared with 4 percent for Latin America, Moodys said in an earlier report. Without faster growth, repeat defaults may become common as Caribbean governments find it easier to cut bond payments than spending, said Arturo Porzecanski, a professor of international finance at American University in Washington.