Seychelles to Sell $30 Million of Bonds to Repay Existing Debt
By Vernon Wessels
Aug. 7 (Bloomberg) -- The Republic of Seychelles, a group of islands in the Indian Ocean, plans to sell $30 million of bonds to repay existing debt.
The notes, due Oct. 3, 2011, have been priced at an interest rate of 9.125 percent, according to an e-mailed statement today from Lehman Brothers Holdings Inc., which was hired to handle the transaction.
The Seychelles has a credit rating of B, with a stable outlook, at Standard & Poor’s, the statement said. The rating is five levels below investment grade.
To contact the reporter on this story: Vernon Wessels in Johannesburg at vwessels@bloomberg.net
Editor’s Note: Creating more debts to pay back debts. This is the Seychelles way of managing the economy under SPPF.
“Statement at the Conclusion of the 2008 Article IV Staff Mission to Seychelles”
We publish below part of the statement issued on January 30, 2008, in Victoria by an International Monetary Fund (IMF) staff mission – We feel that this particular piece best described the state of the economy then and now - it stated clearly what was required of the people charged with economic management in Seychelles; the situation has now peaked reaching crisis point:
“An IMF team, headed by Mr. Norbert Funke, visited Victoria during January 17-30, 2008 to conduct the Article IV consultation discussions with Seychelles. It reviewed economic developments and prospects, and discussed with the authorities their policies to achieve debt sustainability, external stability, and the goals of their “Strategy 2017.” The mission met with his Excellency President James Michel, the Minister of Finance Danny Faure, the Minister of National Development Jaquelin Dugasse, the Governor of the Central Bank of Seychelles Francis Chang Leng, other senior government officials, representatives of the private sector, non-government organizations, and the diplomatic community.
“To put the economy on a strong, sustainable growth path for the medium term, it will be essential to broaden and deepen reform efforts aimed at restoring macroeconomic balance and improving competitiveness. Firm fiscal consolidation, a transparent debt strategy, exchange regime liberalization, and more structural reforms are needed to reduce high public debt to a sustainable level, restrain demand pressure, and support private sector growth. These policies, in combination, will reduce the vulnerability of the economy and contribute to long-run improvements in the living standards of all Seychellois. Success will depend in large part on providing momentum and credibility to the reform efforts and, in this regard, rigorous implementation of the 2008 budget will be essential.
“The IMF stands ready to assist the authorities in refining and implementing their reform program, and looks forward to continuing a close and constructive dialogue.”
SPPF GOVERNMENT FAILS TO PAY INTEREST AND PRINCIPAL ON 54 MILLION EURO LOAN – SOVEREIGN CREDIT RATINGS REVIEWED
The SPPF government of President James Alix Michel has once again reneged on its obligation to the International Financial Market by failing to pay interest and principal on 54.75 Million Euro loan which fell due on July 1st 2008, thus bringing further shame on our country as a bad debtor. This is further proof that things are now totally out of control and we should all brace ourselves for the worse. Standard and Poor’s Ratings Services said that it lowered its foreign currency credit rating on the Republic of Seychelles to “CCC/C from “B/B.” Explaining why the review of Seychelles sovereign credit ratings have become necessary Standard and Poor’s stated that “… the rating actions follow yesterday’s notice by holders of the Republic’s 54.75 million Euros amortizing notes which are due in 2011 of their intent to accelerate payment as a result of the republic’s failure to make interest and principal payments due on July 1, 2008.” The release is dated August 1st 2008.
For some time now the government has been taking loans after loans just to keep the country going avoiding a total collapse of the economy by a thread. The government has been so desperate to keep the country afloat that it had resorted to taking loans to pay more loans, a practice which is generally accepted as committing financial suicide. Its latest failure to pay its loan has clearly demonstrated that our country is in more trouble than originally thought.
As the pressures to speed up repayments mount, one wonders how the government is going to avoid utter catastrophe in the coming months if not weeks. The IMF have officially taken control of our failing economy and the way things are going it is only a question of time before the government gives up and throw in the towel completely. Amidst food shortages and scarcity of everything else Patrick Vel of STC was seen on SBC television nervously explaining why the country has run out of flour.
The Seychelles economy has been characterized by one shortage after the other as it slowly stutters to a standstill after severe shortages of onions, potatoes, milk, rice and now flour. Even goods that are produced locally, such as soft drinks, fruit juices, mineral water and other beverages have also suffered scarcity as businesses struggle to import the most basic raw materials due to acute shortages of foreign exchange. These are all signs that our economy is on the verge of collapse and unless the government can literally create a miracle the imminent economic collapse remains a real possibility. Wonder what Orderly has in store for the President this week? Judge me by my actions!
LONDON (Standard & Poor’s) Aug. 1, 2008—Standard & Poor’s Ratings Services said today that it lowered its foreign currency sovereign credit rating on the Republic of Seychelles to ‘CCC/C’ from ‘B/B’. Standard & Poor’s also said that it placed the ‘CCC/C’ foreign currency and ‘B+’ long-term local currency ratings on CreditWatch with negative implications. The ‘B’ transfer and convertibility assessment on Seychelles is unchanged. These rating actions follow yesterday’s notice by holders of the republic’s €54.75 million amortizing notes due 2011 of their intent to accelerate payment as a result of the republic’s failure to make interest and principal payments due on July 1, 2008. Standard &Poor’s doesn’t rate the amortizing notes, which Lehman Brothers privately placed in August