Bond swap for Dominican Republic

On Wednesday the Dominican Republic made an exchange worth $1.1 billion on two bond issues in order to get some relief of its debt.

The president of the Dominican Republic, Leonel Fernandez, pronounced the deal a success although the government still has to reach settlement with some bondholders who did not agree to the exchange.

The bondholders who did agree will get $456 million in 9.5 percent amortizing bonds due in 2011 and $574 million in 9.04 percent amortizing bonds due in 2018. The old bonds would have come due in 2006 and 2013.

The markets seemed to be comfortable with deal, and analysts called it good for the government and acceptable for investors. The deal was part of the conditions imposed by the Paris Club to bring debt relief to the Caribbean nation.

The bond swap puts off interest payments due this year and next by adding them to the principal on the new bonds, and extends the maturity of the country’s debt, thus letting up on its immediate cash burden.

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