As a result of difficulties faced meeting its debt obligations, Grenada will now be exchanging new US$ and EC bonds for a major part of both external and domestic bonds and commercial loans. The exchange will also include guaranteed debt. The new securities being offered in exchange are described in an offering memorandum dated September 9, 2005. For each eligible claim tendered in the exchange offer, holders will receive new bonds with a principal amount corresponding to the tendered principal amount of such eligible claim, together with accrued but unpaid interest thereon. The claims eligible to participate in the exchange offer are in aggregate equal to approximately US$275 million. All US$-denominated claims will be offered new bonds denominated in US$ and all EC$-denominated claims will be offered new bonds denominated in EC$. The new bonds being offered by Grenada will mature in 2025 and have coupons that will increase over time from 0.85 per cent to 8.00 per annum. The new US$ bonds will be issued pursuant to an indenture with JP Morgan Chase Bank as trustee for the holders. The new EC$ bonds will be issued pursuant to a fiscal agency agreement with the Eastern Caribbean Central Bank as a fiscal agent for Grenada. Bear Stearns will act as deal manager for this exchange offer. The Government of Grenada has made it clear that it does not intend to pay any non-tendered eligible claim unless resources become available. To prevent the possible destabalising of its financial sector, the Government may opt to continue to service domestic commercial loans and some local bonds. This latest exchange offer comes as a result of the devastation wrought on the economy by Hurricanes Ivan and Emily. The cost of the damage caused by Hurricane Ivan which hit the island in September of last year has been put at EC$2.4 billion (200 per cent of Grenada's 2003 nominal GDP). Almost 28,000 houses were damaged of which 10,000 were irreparably so. Ten months later, during which Grenada was undergoing a recovery, Emily with winds of 90 miles an hour struck the island leaving in its wake damages estimated at EC$140 million (more than 12 per cent of Grenada's 2004 nominal GDP). Grenada now has to ask its creditors for debt relief while it undergoes reconstruction and resuscitation of the country's civic amenities and infrastructure. Government officials will be making a presentation today in Port of Spain, Trinidad and Tobago, to describe in greater detail this bond exchange offer. Reprinted from jamaicaobserver.com