LatinFinance - July/August 2016 - 22

INVESTOR
REPORT
CARIBBEAN

Cuba creditors
In search of a deal
PAGE 22

Sovereign debt
Time to go to market?
PAGE 26

Renewable shift
Energy sources in flux
PAGE 28

Back to the table
A group of Cuba's private creditors is looking to open negotiations with Havana as the government mends ties with the West and warily pursues a thaw with the US. By Pascal Fletcher
In the mid-1980s, Cuban leader Fidel Castro
led a noisy international campaign against
the foreign debt burdens of developing countries like his own, blasting them as "unpayable" and as a weapon of extortion wielded
by "forces of imperialism" led by the US.
Three decades later, a Cuban government
now headed by his younger brother Raúl
Castro is not only engaged in a cautious rapprochement with its former enemy Washington, but has also successfully negotiated
debt restructuring and forgiveness deals
with major sovereign creditors in a move to
unlock more international financing.
"I think times are changing," says Rodrigo
Olivares-Caminal, a sovereign debt expert
who is trying to persuade the Cubans to go
one step further and settle with private commercial creditors owed by the Communistruled Caribbean island.
Cuba is estimated to owe to private credi-

22 L ATINFINA NCE.COM - July/August 2016

tors $6 billion to $8 billion, stemming from
loans contracted over decades by Havana
with private investors, banks and financiers.
Olivares-Caminal, a professor of
finance and banking law at London's
Queen Mary University who has worked
as a debt expert for the United Nations
and the World Bank, was appointed
earlier this year by a group of private
Cuba creditors to approach the Havana
authorities about a possible settlement.
The group, known as the Cuba ad-hoc
London Club creditor committee, and originally comprising of one trust and two funds
- Stancroft Trust, Adelante Exotic Debt Fund
and CRFI Ltd - holds obligations representing at least $1.2 billion of Cuban debt.
It's an estimated face value, OlivaresCaminal says. The debt mainly stems from
loans Cuba received from non-US private
banks in the 1970s and 1980s, before Cuba

defaulted in 1986. It also includes some
trade credits and commercial debt - no
bonds are involved.
Asked what those now holding the paper
had paid for it in the secondary market,
Olivares-Caminal says he cannot confirm
a recent media report that they had paid
as little as 1.5 cents on the dollar - however
he says he believes the reported figure was
excessively low.
Olivares-Caminal says he is seeking other
investors, mostly European private banks,
to join the committee, while he makes
overtures to the Cuban authorities. He has
sent letters to a number of official recipients
in Cuba, including "at the highest level", he
says, although he declines to reveal who.
"We are working towards finding a way
to have an open line of communication," he
adds. The Cubans have not responded so
far, he says.
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