The Central Bank made a payment on 23 April towards the overdue coupon for the 2006 bond, according to Bear Stearns in its monitoring of the Dominican emerging market. According to the brokerage firm?s Franco Uccelli, the payment was made before the grace period expired, thus avoiding a default. Uccelli says that the government decision is ?welcome news to the market? and explains that attention will now turn to the possibility of a bond restructuring as part of the government?s strategy to generate close to US$100 million in debt service savings from private creditors, as per the agreement with the Paris Club. ?While we do not discard a bond restructuring as a real possibility, at the moment we believe that the government will likely seek to exhaust other avenues first, such as raising fresh funds to at least partially offset the financing gap (an option embedded in the agreement with the Paris Club), as well as pursuing refinancing options with commercial banks and suppliers.?
Uccelli also reports today that an International Monetary Fund mission is expected today in Santo Domingo to start the second review of the standby agreement. Future fund disbursements depend on the country?s government finances meeting the review’s approval.