The Economist Upgrades its DR's Financial Risk Summary

aegap

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HERE

..a brief explaination why is under their June 16th 2006 DR update. (login required)
 
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rellosk

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I like the article that begins, "President Leonel Fernández’s party, the PLD, should emerge from recent legislative elections substantially stronger, allowing him to secure passage of economic and structural reforms." (It doesn't require a login).

I've always enjoyed reading The Economist, very clear and concise. I don't always agree with their point of view, but it's usually an easy read on some not so simple topics.
 

aegap

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DR's recent GDP history, ..

CS_CSDO_MAIN_20060601T000000_001.gif

Economic Forecast
GDP grew by 12.6% year on year in the first quarter, stronger than expected. As a result, we have revised our forecasts for GDP growth up to 6% in 2006 (from 5% last month).


The Economist Intelligence Unit
 

aegap

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A cover story in Trade Finance: DR made "Deal of the Year" on debt restructuring

DR receives award
Trade Finance Magazine, a member of Euromoney Group, has decided to classify the Dominican Republic's debt renegotiation with the international private banking system as "Deal of the Year 2005", according to a report by Diario Libre. The magazine's editors informed Dominican authorities that the March edition will include a summary of the negotiation process. The award will be presented to Dominican authorities and creditor banks next June.

Trade Finance,


Deal of the Year (Coming Back into the Fold)
Dom Rep - London Club Restructuring
Coordinating banks: ABN Amro; BBVA; Deutsche Bank
Size of facility: $150 million
Sponsor: Govt of the Dominican Republic
Extension of tenor: 2-year grace, 3-year repayment
Financial advisors to
Dom Rep authorities: Houlihan Lokey Howard & Zukin
Lawyers: Cleary Gottleib - advisors to sponsors;
Clifford Chance - advisors to lenders
Purpose: Restructuring of existing commercial loan facilities

This is an unusual deal for us to select as a deal of the year - but a very important one as it allowed the Dominican Republic to come out of a financial freeze, begin to access international finance again and restart vital public works, projects and tap new trade lines.

Speaking to Trade Finance, Ramon Tarrago, advisor to the technical secretary of the presidency says: "Everything was tough until we were able to do the restructuring - our trade lines had been cut or severely reduced. The restructuring allowed the country to open up for fresh funds in the market and allows public works projects to go ahead again. We are back on track and the support of the commercial banks has been key as well."

The roots of this deal can be traced back to 2003 when a series of banking failures triggered the worst economic crisis in the Dominican Republic's history. Exacerbated by an adverse external environment, this crisis led to a collapse in domestic confidence, characterized by massive capital flight, rapidly rising inflation, and the sharp depreciation of the peso. Despite the debt relief granted by the Paris Club earlier that year, when the new government of President Leonel Fernandez took office in August 2004 it faced considerable financing shortfalls for the period 2005-06.

One of the first actions of the new government was to reach agreement with the IMF over an ambitious programme of comprehensive reforms. However, it was evident from the outset that the financing of the 28-month stand-by arrangement would only be possible through further debt relief from both official and private sector creditors. Consequently, a strategy was drawn up to restructure further maturities due to the Paris Club, $1.1 billion in global bonds, over $300 million in debts owed to suppliers, and maturities due in 2005 and 2006 under $300 million in direct and syndicated loans outstanding to international commercial banks.
As financial advisors to the Dominican Republic , investment bank Houlihan Lokey Howard & Zukin was charged with implementing a strategy which would allow the authorities to successfully restructure maturities due to commercial bank creditors, the majority of which were European institutions. Leading the creditor bank group were ABN Amro, BBVA and Deutsche Bank.

For the Dominican Republic and its client, the principal challenge was to persuade the banks to provide the debt relief required in the 2005-06 period whilst continuing to disburse under recently-agreed facilities. This challenge was made more complex by the fact that the authorities had to ensure that the terms offered to its commercial bank creditors were broadly comparable to the terms of the bond exchange and the agreements reached, or likely to be reached, with the Paris Club and suppliers. The participation of private sector insurers in some facilities and the fact that arrears were starting to accumulate as a result of the grave financial situation served as further complications.
...

http://hoy.com.do/app/article.aspx?id=80563
 
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