Franco Uccelli of the Bear Stearns brokerage firm filed a report to say that the Dominican press has informed that high-level government officials, including President Mejia himself, yesterday approved the debt-relief proposal that the country will present to the Paris Club of bilateral creditors. Face-to-face meetings are scheduled to take place in Paris next week.
Uccelli also referred to the press reports that suggest the United States, Spain and Japan, which together account for the biggest of the Dominican Republic’s Paris Club creditors, have initially endorsed the country’s intent to reschedule US$320 million worth of external debt payments (principal and interest) coming due this year.
He comments that while the press reports reflect the government?s optimism, the leading Paris Club countries’ support for the DR?s plan cannot be guaranteed until the document is reviewed.
In his understanding, rather than a document with specific information on the DR?s plans to restructure its bonded debt, the government has presented ?a commitment to pursue some sort of debt relief program from private creditors (the features of which would be determined at a later date) that would comply with the spirit of the Paris Club’s comparability of treatment principle in exchange for bilateral debt relief.?
Uccelli expects the interest payment due on the 2006 global bond to form part of the Paris Club negotiations next week. He speculates that the Dominican government may propose to the Paris Club that it be allowed to make the payment before the expiration of the grace period, in order to use the time before the next large bond payment comes due in July to prepare a restructuring proposal that the market would be compelled to accept.