Franco Uccelli of Bear Stearns reports today that the Dominican government announced over the weekend the results of the reopening of its early May exchange offer. The reopening was intended to retire a greater percentage of the old 2006 and 2013 bonds and, as a result, ease the country’s short-term debt service burden and further reduce it near-term financing needs.
Some US$36 million in old bonds from a total US$71 million outstanding were tendered during the reopening, bringing to 97% from the previous 94% the level of investor participation in the exchange. The reopening is scheduled to settle on Wednesday, 20 July.
“We view the results of the reopening, which reportedly exceeded the government’s own expectations, as positive on the margin, since most of the good news related to the exchange was already priced in following the very successful original restructuring operation in early May,” writes Uccelli. He explains that next on the government’s agenda will be completion of the first review of the country’s current stand-by arrangement with the International Monetary Fund, which has been subject to a number of delays and now seems unlikely to be completed before early September.
Delays seem to hinge primarily on the better-than-expected outcome of several performance indicators, and how to adjust the program accordingly. IMF disbursements are tied to completion of the program’s review, which is also a key element of support for the credibility of the Fernandez administration’s overall economic strategy.