Country Update
November 20, 2020- Albania
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- Ivory Coast
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- Namibia
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- Suriname
- Trinidad And Tobago
- Turkey
- UAE
- Ukraine
- Uruguay
- Venezuela
- Vietnam
- Zambia
Market Prices
suriname sovereign| Security | Bid | Ask | Yield | Spread | PX Change | |
|---|---|---|---|---|---|---|
| SURINM 9 7/8 12/30/23 | 52.85 | 53.35 | 40.79 | 11005 | +731 | 2023-12-30 |
| SURINM 9 1/4 10/26/26 | 51.65 | 52.15 | 23.59 | 2526 | +40 | 2026-10-26 |
Market Map
suriname sovereignYield Curve
surinameMarket History
Market Intelligence
surinameThe government has already carried out some important reforms such as the devaluation of the Surinamese dollar and the increase in the fuel tax.
Broadly speaking, the Santokhi government is proposing a similar recipe to the one that Bouterse made
The difference between the success and failure of the reforms lies in the government’s commitment to fulfilling its program.
The main downside risk is that Santokhi does not have the political and popular support to carry out the reforms.
HOLD: We do not expect a harsh restructuring proposal from the government; hence we deem downside as limited.
The government proposes to increase revenues, from 18.7% to 31.0% of GDP.
On the spending side, the Draft Budget also proposes to cut current expenditures.
Despite the efforts of the new administration, the interest burden is too high to reduce total expenses.
The budget estimates a fiscal deficit of 17.8% and financing needs of 33.3% of GDP. We do not believe that the government can obtain this financing,
The government has hired Lazard to manage the refinancing or restructuring of bonds, which are still pricing-in relatively high recovery values.
The COVID19 crisis could open the door to new sovereign restructurings
In the last decade, sovereign default events carried out for political reasons have increased by 50%
Suriname and Ecuador, with previous complications, this year saw their position even more deteriorated due to the COVID19 crisis and announced restructuring
On the horizon El Salvador, Angola and Sri Lanka are the countries that generate the most concern of those followed by EMFI
The Central Bank of Suriname devalued the official exchange rate from 7.5 SRD/USD to 14.2 SRD/USD, which means a devaluation of -47.2%.
Broadly speaking, the Central Bank formalizes the fixed exchange rate system that it has maintained since 2016
We maintain our inflation forecast for 2020 at 71%, because it considers an average exchange rate of 12.6 SRD/USD.
There are high upside risks, due to the impact of the adjustment of fuel prices and a potential adjustment of electricity and water services.
We retain our HOLD rating on Suriname’s bonds because at current prices we see limited ...
The government announced a devaluation and this policy decision will play a major factor in the assessment of Suriname’s debt.
The devaluation liquates the domestic debt but, also, opens up some room for new indebtedness.
Local media reports the government is preparing a 7-year, apparently-domestic USD-denominated bond for USD 400 mn with a 5% coupon, guaranteed by the future oil revenues.
We retain our HOLD rating on Suriname’s bonds because, at current prices, we see little downside and significant upside potential.
Pressure grows on China, as one of the world's main creditors, to enter the DSSI without restrictions
The terms of China's agreements with emerging or frontier nations are extremely aggressive compared to members of the Paris Club
One issue to keep an eye on is the participation of Chinese state banks in the renegotiations, as these entities hold about 75% of the country's total debt
Chinese authorities have spoken with 20 countries about the DSSI, and it has approved relief for an amount close to USD 3 bn for 10 countries
Angola and Zambia are the countries that most urgently need to address a restructu...
Santokhi revealed the first findings in Suriname’s public finance. Suriname accumulates a total debt of USD 3.9 bn (SRD 29.5 bn).
Surinamese debt as a percentage of GDP increased from 19% to 87% under Bouterse’s government
According to the IMF, the fiscal deficit went from -3.1% of GDP to -8.6% of GDP from 2010 to 2019
Foreign reserves fell -18.4% during Bouterse’s administration, from USD 690.8 mn to USD 563.5 mn.
We retain our HOLD recommendation given that we see a strong likelihood that Suriname will seek a standstill on its 2026 bond.
Standstills have been the talk of the town since March, but only Ecuador, Suriname and Belize have used them so far.
We look at the similarities and differences between the three cases in order to understand what each country intends to do with them.
BUY Ecuador: Restructuring negotiations are already very advanced and we think the bonds will have significant upside after a deal is closed.
SELL Belize: There is willingness to continue paying after the standstill, but their repayment record speaks for itself.
HOLD Suriname: The outgoing administration negotiated a standstill on their 2023 bond, but we don’t kno...
On July 13, former police chief Chan Santokhi of the VHP party was elected President by acclamation in an uncontested election in Parliament
Santokhi will take, closer to Western democracies, unlike Bouterse’s policy of allying with China, Cuba and Venezuela.
In general, the new cabinet seems to be composed of competent people with adequate backgrounds for their roles.
But the government also includes people of dubious reputations like the new vice president, Ronnie Brunswijk, who has a sentence of 6 years in prison for drug trafficking in the Netherlands.
As for the public debt...
The process of defaulting and restructuring usually involves a sharp spike in yields just before the credit event.
Then yields lose their economic meaning and only prices make sense, as they turn into a summary of market expectations for the recovery values.
This period ends when an exchange takes place and the old bonds are replaced by new bonds with a given exit yield
One year after the agreement, yields fall on average 4.1 pp from 12.6% to 8.5%.
This shows that there is potential to pick up price gains by entering a credit just after restructuring, and waiting for spread compression during the first year.
Last Wednesday, Suriname posted a Consent Solicitation seeking to modify some key terms on its 2023 bond.
The request involves a rescheduling of the missed June 30 amortization, currently on its grace period.
We view this as a positive development for bondholders because it opens the door for Suriname to deal with its liquidity and solvency problems in an orderly way.
The request is essentially a standstill and would help prevent a hard default.
The proposal also signals a turn in economic policy by incorporating the possibility of an IMF package from the outset.
Today the new members of the Assembly took office. An extraordinary meeting was held in which the new president and vice-president of the National Assembly were elected.
Ronnie Brunswijk from ABOP was elected as president of the National Assembly and Dew Sharman from VHP as vice-president
The new coalition wants to make the government transition quickly. According to the DWTonline newspaper, the new coalition agreed with Bouterse that the new government would take office in mid-July
Chan Santokhi of VHP was nominated officially as Suriname's presidential candidate.
Payment on the 2023 bond, which comes due on Tuesday 30, is in peril due to liquidity constraints. The country owes a total of USD 23 mn between principal and coupons.
The central bank had been using private citizen money to cover imports and exchange operations, resulting in net reserves falling to a negative USD 100 mn.
In April, the government increased its long-term debt with the central bank by SRD 4.9 bn (USD 653 mn), a very large amount for the country.
Basic liquidity metrics are somehow positive at face value, but they hide some of the subtle problems with the country.
Our debt assessment is pessimistic giv...
Low interest rates and the hunt for yields of the last decade has left broad swaths of EMs overindebted and vulnerable.
The first half of 2020 is not yet over and we already have 3 countries in default.
The recent record of most defaults on Eurobonds on a single year was 4 in 2017, so 2020 is not far from setting new records.
Eurobond restructuring processes are usually among the most complicated due to the variety of holders and the different interests they represent.
Suriname, Zambia, Belize, Sri Lanka and Angola are in the most risk to engross the default-statistic for the year.
May was one of those months that feels like a year. We had a default in Argentina, a tense election in Suriname, a deadly pandemic still spreading around the world, and yet, it was a good month for emerging market debt
Our EMFI Core Index went up for the first time in 6 months. The biggest winners were Argentina, Angola and Ecuador, while Venezuela, Suriname and Sri Lanka were among the negative outliers that went against the general risk-on mood
The macro and fiscal situations deteriorated further for all countries covered, and we chronicled the dramatic economic crash in our Country Reports
We’ve been preparing fo...
Suriname's debt has increased rapidly and its weight on GDP could hit 104% by the end of the year.
If the opposition takes power, the new government could seek restructuring the country’s debt.
Multilateral loans account for 15,9% of the total stock, while bilateral debt is 13,1%, commercial loans 21,1%, bonds 25,9% and domestic debt 24%.
The new government could choose to tackle bilateral and domestic debt without affecting bonded debt.
Current president Desi Bouterse's National Democratic Party (NDP) got 16 seats out of 51 with 24% of the vote.
If the opposition forms a coalition between VHP, NPS, PL and ABOP, it would get 33 votes. It still would not be enough for a president to be elected.
If the MPs fail to reach an agreement within the National Assembly, the election goes to the Popular Assembly. Taking party-votes into account the opposition would reach 671 votes, much more than the 468 required to elect a president.
Considering Bouterse’s history (he led an authoritarian government after a military coup in the ’80s), and with the t...
As of May 22, 8 countries have at least one USD-denominated sovereign bond trading below 50 cents on the dollar.
The Covid-19 crisis could lead to a new wave of sovereign defaults from prolonged confinements.
We discuss the worst debt restructuring events so far this century.
Argentina 2005 remains at the forefront of these events if we exclude the exceptional cases of countries at war or leaving them.
The countries with the most compromised solvencies that could generate problems with their debt are Angola and somewhat behind, Sri Lanka, El Salvador, Egypt and Pakistan.
The President has had to face several scandals in recent months: corruption allegations, tensions between the government and the private sector have increased.
There has been electoral irregularities, the opposition parties reported that the list of voters included people who had died or did not belong to the indicated address
Opposition parties have also accused Bouterse of benefiting his party during the mandatory quarantine.
In our updated scenario, NDP would get 20 seats, VHP, 17, ABOP, 7, NPS 4 and PL 3. However, we see with medium probability that irregularities will increase on the Election Day ...
A pandemic year was on the cards, the dramatic magnitude of its effects was not.
The global economy is expected to shrink by 3% in 2020, but leading indicators are pointing to a deeper downturn.
Emerging countries with a history of volatile economic growth will show the worst results.
Some economies may experience a period of above-trend growth during the recovery, although the level of GDP will remain, in most cases, below the pre-virus level.
Pakistan is the weakest among the EMFI Countries, in terms of the spread of the virus. Lebanon, Sri Lanka and Barbados are the strongest, with a controlled increase rate and a persistent lockdown.
The countries that we evaluate with the worst economic performance year-to-date are Angola, Venezuela, Lebanon, Barbados, El Salvador, Ecuador, Sri Lanka, Argentina and Suriname.
Since the end of 2019, the local currency has depreciated -70.5% in Venezuela, -52.4% in Lebanon, -43.5% in Argentina and -40% in Suriname.
El Salvador and Argentina launched the most ambitious fiscal program among our sample, which will cost 6% and 5.6...
The safest rung of EM hard-currency sovereign bonds fell on March but has already retraced all their losses.
Mid-quality EMs plunged over March and have risen somehow since, but haven’t fully recovered.
This segment has seen a 320 bps rise in average yield in 2020, going from an average 6.1% yield to 9.3%.
We believe high-yield bonds in our mid-quality group have significant upside if they avert a credit event.
After a dry March, markets are again open for fresh bonds, but only from relatively high-quality issuers.
US stocks rose 12.7% in April, while US investment grade bonds rose 4.6% and EM bonds 4.0%.
Our EMFI Core Index fell 0.9% over the month and is 27.1% down YTD.
The best performers of April were Egypt (+4.7%), Sri Lanka (+4.0%) and Turkey (+3.8%).
The worst performers were Suriname (-26.9%), Lebanon (-14.0%) and El Salvador (-11.3%).
The IMF has approved just over USD 16.0 bn for 61 countries.
Of the 16 countries we follow, 6 have already been granted financing for a combined USD 3.5 bn.
Lebanon and Argentina presented restructuring proposals asking for large debt relief but not offering much adjustment.<...
We identified 23 countries that have at least one bond yielding above 10%, a threshold usually associated with sovereign distress.
Among the most distressed credits, first-time defaulter Lebanon is trading between 16.3 and 18.3 cents on the dollar, on account of slow progress on a reform plan.
Argentina’s debt goes in a range of 23.2 to 34.6 cents on the dollar, days after the Fernández administration’s aggressive mid-April proposal to bondholders was publicly rejected by 3 creditor groups.
Ecuador trades between 28.8 and 33.6, after negotiating a coupon standstill that will give the country until Augus...
On April 15, the G20 agreed on a standstill for bilateral debt service during 2020. Nonetheless, the agreement only applies to IDA-eligible countries. The suspension will be NPV-neutral and will involve repayment over 4 years, including a 1-year grace period.
Multilaterals haven’t found a way to implement a similar standstill. In fact, Fitch Ratings warned them that joining in on the G20 standstill could result in rating downgrades if not appropriately compensated by shareholder countries.
On aggregate, official creditors account for almost 90% of the debt of low-income, and 60% of that of lower middle-income countries, b...
At the beginning of March, the resounding fall in sovereign bonds begin due to the fall in oil prices and the coronavirus outbreak. To this negative external outlook, internal tensions are added.
Reviewing the composition of international reserves we find that only 42% of foreign reserves are liquid (USD 234 mn or 7 weeks of imports).
Suriname is currently in a scenario that combines three types of shocks. The first is the depreciation of the real exchange rate. We calculate that the real exchange rate has depreciated 36.4% since December.
The second shock is associated with the current account deficit. In 2020...
Two weeks ago, we singled out some early calls for a generalized global debt moratorium in our Global Strategy Viewpoint: Force Majeure. The idea has gained significant traction and is becoming one of the main themes in economic and financial discussion.
While we don’t think a generalized moratorium on commercial bonded debt is likely to succeed, investors should be aware that it is a growing theme and bondholders will probably be under increased pressure to accept attempts at restructuring bond terms.
There are some indications that China is a significant roadblock for the IMF-World Bank initiative for a bilateral debt m...
According to Bloomberg, on April 1, Suriname credit rating was downgraded by Standard & Poor’s (S&P) to 'CCC+' from 'B' with negative outlook.
S&P estimates that, in the next 12 months, there is at least a one-in-three probability that Suriname could default on its debt obligations.
At EMFI Securities, we believe that general elections are likely to be delayed as a measure to curb the spread of coronavirus, which would further increase internal conflict.
Suriname has been dragging large fiscal deficits for years. In 2019, the fiscal deficit reached 8.6% of GDP in 2019
The COVID-19 crisis is raising a difficult question of public policy for emerging market economies with low fiscal space, which have to reconcile economic and social policy with debt service.
The relation between liquidity and solvency problems is not straight-forward: the COVID-19 shock, which presents liquidity challenges first and foremost, can unearth underlying solvency problems and can also turn liquidity problems into solvency ones if improperly managed.
We’re already seeing some early calls for an international debt holiday to exempt countries from paying during the COVID-19 crisis. Multilateral organizations are ...
The mining sector is key to Suriname's economy. Gold exports represented an average of 65% of exports in the last decade.
In total, legal gold production would have reached 1.25mn oz in 2019, 6% less than in 2018.
We estimate that gold production will remain relatively stable in 2020, although internal conflicts persist as downside risks.
In 2020, the EMFI Securities forecast for the average price of gold is 1650 USD/oz, which represents an increase of 18.3% compared to 2019 mid-price.
In this scenario, exports would increase by 8% and reach USD 2,390 mn in 2020, also considering a 40% reduction in oil exports.<...
The current crisis will translate into twin demand and supply shocks, with an oil price war on top of it.
The demand shock driven by declines in the world’s main trading partners will particularly affect emerging markets which are characterized by low diversification of exports and production.
Supply chains around the world have been disrupted by factory closures, first in China and now in Europe and the US.
The markets most exposed to a potential slowdown are the major commodity exporters: Venezuela, Ecuador, Angola and the markets most reliant on Chinese and US tourism.
In most EMFI countries the tourism act...
Our EMFI Core Index has fallen 27.6% year-to-date (YTD), while Our EMFI Expanded Index has fallen 19.2%. The last two weeks have been particularly bad, with consecutive 10% declines.
Unsurprisingly, countries heavily reliant on oil have suffered the most. Among our 34-country group, almost every oil-reliant one has fallen more than the 18.3% median.
The second thing that jumps to the eye is that the riskier countries have fared proportionally worse than relatively safer countries, when excluding oil-dependent countries.
We’re also seeing several countries crossing the 10% yield threshold, usually associated with dis...
The outbreak of the Coronavirus, as well as the “oil price war” between Saudi Arabia and Russia have triggered almost complete certainty that a global recession is coming over the next quarter.
Some economists are expecting a 2-quarter rolling recession, but there is potential for the downturn to extend further if the virus reemerges after activity is unfrozen.
Emerging market debt is taking a beating in 2020 so far. The countries we cover registered a median 14.3% fall year-to-date, with the worst performer doing as bad as 60.3% down (Ecuador) and 38.5% down (Angola).
We compare indicators on 4 major categori...
February was a bad month for EM debt, as the market went into risk-off mode pushing bonds to backtrack on the gains made over the previous two months. 11 out of the 15 countries in our EMFI Core Index fell on the month, while the weighted index itself fell 5.8%, retracing below December levels.
Our Expanded Index ex. Core confirms February’s sell-off, registering declines in 21 out of 25 countries and an aggregated fall of 0.9%. Nonetheless, this fall is significantly below that of our EMFI Core Index.
Our selection of countries is clearly biased towards some large and risky high-yielders, which translates to an expectabl...
On May 25, parliamentary elections will take place in the country. In Suriname the National Assembly elects the president (34 of 51 votes are needed).
The latest poll indicates that 77.2% of respondents felt that the current economic situation is worse than 12 months ago.
When asked what grade voters would give the Bouterse government between 2015 and 2020, respondents answer with a rating average of 4.6 of 10
Survey results show NDP and VHP, the main opposition party, would obtain 4 seats each, of the 17 seats corresponding to Paramaribo.
In Paramaribo, NPS would get two seats and ABOP only one and there would be 6...
On January 7, oil companies Apache Corporation and Total said they've made a major oil discovery offshore at the Maka Central-1 well drilled offshore Suriname on Block 58, near to Guyana’s border, on trend with Exxon’s Stabroek block.
The IMF estimates that the fiscal deficit reached 8.6% in 2019 (70 basis points more than in 2018). Additionally, it showed a current account deficit of 6.1% in 2019. Recently, the external account deficit has been financed by higher foreign direct investment from oil sector. The authorities have planned to apply fiscal measures, like reform electrical sector, reducing subsidies in ...
On November 29, a military court in Suriname found guilty President Desi Bouterse of executing 15 government critics in December 1982 following a coup. The trial that began in 2007 concluded that Bouterse oversaw an operation in which the soldiers under his command kidnapped 16 opponents of the government (lawyers, journalists, military and university professors) and 15 of them were killed in Fort Zeelandia in the capital, Paramaribo. Only one of the detainees - a union leader - survived the killings and was able to testify against Bouterse.The court sentenced him to 20 years in jail. However, the court has not yet issued an arrest warrant...
The Progressive Reform Party (VHP by its acronym in Dutch) and the Progressive Union of Workers and Farmers (PALU by its acronym in Dutch) have made public their disagreement with the debt strategy of the government of Suriname.
The biggest opposition party in the country, VHP, alerted the international community about the increase to the debt ceiling and the USD 150 mn notes – issued to pay private company Alcoa for the acquisition of the Afobaka hydroelectric plant – highlighting concerns for debt sustainability. On the other hand, PALU's main criticism was the mishandling of negotiations with Alcoa.
On November 14, the Suriname government announced an upcoming issuance of 18-month notes worth USD 150 million, with semiannual coupons. This financing will be used mainly to make a payment to the American company Alcoa to complete the process of transferring the Afobaka hydroelectric plant to the state-owned Staatsolie Power Company Suriname N.V (SPCS).
Suriname is recovering from a two-year recession that took place between 2015 and 2016 caused by the end of alumina exports. Suriname has offset the losses due to the depletion of alumina, increasing gold and oil exports. GDP growth went from -3.4% in 2015 to -5.9% in 2016, after whi...
On November 6, Canadian miner IAMGOLD published its third quarter financial report. Gold production at its Rosebel mine was of 55,000 oz. over the period, an 18% fall over the same quarter of the previous year. Lower output came as a result of the production stoppage caused by violent confrontations with unauthorized miners in August. The company also registered a 22% increase in the cost of sale per ounce, due to the lower volumes.
On October 18, the Nationale Democratische Partij (NDP) government party introduced an amendment to the National Debt Law before the Legislative Assembly, which seeks to eliminate the debt ceiling and the penalties for it. The penalties for intentionally violating the maximum level of indebtedness include up to a maximum of ten years in prison.
On October 16, the opposition party Vooruitstrevende Hervormings Partij (VHP), denounced the Minister of Finance, Gilmore Hoeftraad, before Attorney General’s Office for the violation of the National Indebtedness Law.
Suriname's economy is highly dependent on commodities exports. Suriname is recovering from a period of recession between 2015 and 2016, this recession was the product of the end of alumina production in the country due to natural decline. Suriname has compensated for loss of alumina by increasing gold production. For this reason, GDP growth increased from -3.4% in 2015 to -5.9% in 2016, after which it recovered to 1.8% and 2.6% in 2017 and 2018, respectively.
During 2019, gold prices have increased significantly. In September, it closed at USD 1,472 per oz., a cumulative increase of 14.8% so far this year and 23.5% year-on-year. ...
Suriname's economy is highly dependent on commodities exports. Suriname is recovering from a period of recession between 2015 and 2016, this recession was the product of the end of alumina production in the country due to natural decline. Suriname has compensated for loss of alumina by increasing gold production. For this reason, GDP growth increased from -3.4% in 2015 to -5.9% in 2016, after which it recovered to 1.8% and 2.6% in 2017 and 2018, respectively.
During 2019, gold prices have increased significantly. In September, it closed at USD 1,472 per oz., a cumulative increase of 14.8% so far this year and 23.5% year-on-year. ...
The state-owned company Staatsolie Maatschappij Suriname announced that the efforts in finding oil in the Kankantrie well across the Nickerie coast were unsuccessful. The well was expected to have 800 million barrels of potential capacity. It was one of the wells that were announced at the beginning of the explorations in their Nearshore Drilling Project started in April 2019.
The company said in the same statement that the next step will be the exploration of Powisi well in the north of Paramaribo, which is part of Block C. The company has expended USD 99 mn in this exploration project which has a 10% to 27% probability of suc...
Canadian miner IAMGOLD partially restarted Rosebel Goldmines operations last week, after being paralyzed since July 20, due to a clash between police and unauthorized artisanal miners, which resulted in the death of an artisanal miner. Rosebel has begun mining in the northern areas. However, mining activities near the village of Nieuw-Koffiekamp will remain suspended, said Minister Sergio Akiemboto de Recursos Naturales (NH)
On August 15, Staatsolie Maatschappij Suriname executive director Rudolf Elias explained that the oil company plans to issue bonds next year to finance offshore exploration.
The company intends to raise between USD 1 billion and USD 2 billion through a bond sale together with the listing of some of its shares in the New York or London stock market.
The Suriname government hopes to repeat the history of its neighboring country Guyana, where more than 5 billion barrels have been discovered in untapped oil reserves within its offshore geographical borders.
Production at the Rosebel Gold Mines NV mine in the Brokopondo district, about 80 miles southwest of the capital, Paramaribo, has been halted since last week to ensure the safety of its workers. After unauthorized artisanal miners, seeking gold in areas near the mine, they clashed with the police for mining rights. This confrontation resulted in the death of one miner and several seriously injured people.
On July 5, the Central Bank of Suriname (CBvS) issued its first inflation bulletin, which analyzes the results of May. Monthly inflation was 0.5%. This result was driven byh an increase in fuel prices. There are no year-on-year inflation figures due to the fact that from April 20 to July 9, 2018, there was a workers' strike and the data for the calculation of the Consumer Price Index (CPI) were not collected. Although the CPI is not available for May and June, the monetary authorities presume that the result is aligned with the process of price stabilization.
