Monthly Archives: February 2018

Cuba has more than $1 billion in unpaid commercial debt


Creditors hope to begin negotiations with Cuba on more than $1 billion in unpaid commercial debt from the 1980s.Settling the debt is a key hurdle for the country if it ever hopes to attract large-scale foreign investment.

Signaling the seriousness of its intent, the Cuban London Club creditors committee has retained high-powered American attorney Lee Buchheit.

A creditors group wants Cuba to begin talks on more than $1 billion in unpaid commercial debt from the 1980s — a key hurdle if the country ever hopes to attract large-scale foreign investment.

Signaling the seriousness of its intent, the Cuban London Club creditors committee has retained high-powered American attorney Lee Buchheit of the Cleary Gottlieb law firm.
Buchheit, who is well known for international debt restructurings such as the one for Greece, said Cuba “will need to clean those Augean stables” before major investors will consider putting money into the island.

Julian Adams of Adelante Asset Management, head of the ad hoc London Club Committee of investors who own defaulted Cuban debt, said creditors prefer a negotiated settlement. However, if that does not happen, they could resort to the courts. Measures they could pursue include seizing assets and interrupting Cuba’s international payments and trade.
Adams said the committee put “a good faith offer” on the table in January in an effort to resolve the long-standing issue, which prevents Cuba’s re-emergence into international capital markets. The island has been given 50 days from Feb. 5 to respond.
A representative of Raul Castro’s government did not respond to a CNBC request for comment.

Cuba accumulated billions in unpaid loans and debts under the late Fidel Castro. Mexico, Canada, Australia, France, Italy, Japan and in particular the former Soviet Union, all lent millions, if not billions to the Castro regime in the ’70s and ’80s. Much of it went unpaid for four decades.

About five years ago, the Cuban government began steadily restructuring those loans with creditor countries and received large debt forgiveness. Mexico wrote down 70 percent of nearly half a billion dollars in debt in November 2013. The same year, Russia forgave 90 percent of the $32 billion it said Cuba owed for financial support provided by the then-Soviet Union during the Cold War.

A major achievement was Cuba’s agreement in 2015 with the Paris Club, an organization headquartered in the French Ministry of Finance and made up of officials from creditor countries who negotiate with nations that can’t pay their bilateral loans.
The Paris Club announced an additional 14 countries, mostly European, had agreed to massive debt forgiveness for the island. Cuba owed those countries roughly $11.1 billion in debt, including past due interest. The amount was written down to only $2.5 billion.
According to Reuters, under the terms of that deal, Cuba’s repayment schedule was backloaded through 2033, with no money due during the first year. In addition, many of the countries agreed to discount the debt even further in exchange for the potential profits stemming from future joint business ventures.

The commercial creditors say their offer to the Cuban government is even more generous than that agreed to by the Paris Club. Adams says the offer made to the Cubans gives them even more time before they make the first payment, and that creditors may be willing to change their debt holdings for future equity investments.

Many of the London Club members have held this debt for decades. Spending money on expensive attorneys signals they believe now is the time that a deal might actually be achieved.

Due to the ongoing U.S. embargo against Cuba, Buchheit had to obtain a special license from the U.S. Treasury because he is an American.
Cuba’s commercial debt, issued by European banks in the ’80s, has traded at 6 to 8 cents on the dollar for much of the last 10 years. Deals like this are now without precedent.

Liberian debt traded for 3 cents on the dollar in the 1990s, and creditors eventually received 21 cents on the dollar in a 2008 deal. Creditors told CNBC in 2015 they believed the debt would be settled at 27 to 49 cents on the dollar. They declined to say now what their offer is.

Whether the Cuban government actually wants large-scale foreign investment is unclear. During the thawing of relations between the U.S. and Cuba under the Obama administration, hundreds of international companies, many of them American, went to Cuba looking for opportunities. The number of deals achieved was few; mostly tourism deals that would bring much-needed foreign exchange to the cash-crunched communist regime.


Fidel Castro’s firstborn joined a long list of suicides in Cuba

Clinica de Seguridad Personal, a military hospital in the Kohly neighborhood, where Fidel Castro Díaz-Balart was reportedly getting treatment for depression.

The Miami Herald

Fidel Castro’s eldest son has joined a long list of public figures who have taken their own lives in a country with one of the highest rates of suicide.

In a rare exercise of transparency, the Cuban official press on Thursday reported that Fidel Castro Díaz-Balart, 68, committed suicide after suffering from deep depression for months.

According to various versions, which el Nuevo Herald has not been able to confirm, his death occurred under circumstances that would be difficult to hide.

Rumors ranged from Castro Díaz-Balart shooting himself to jumping off the building in the Kohly neighborhood where he was receiving treatment.
Neighbors said there was a flurry of security activity around the Clinica de Seguridad Personal, a pink and buff colored military hospital in the Kohly neighborhood, on Thursday and Friday morning. But by Friday evening the neighborhood, where many military families live, was quiet. There is always tight security in Kohly with police posted on many corners.

One neighbor said Castro Díaz-Balart locked himself in a fourth-floor room at the clinic and wouldn’t let doctors enter, before throwing himself through a window and landing in front of the building not far from the Cuban flag, which remained at full staff Friday.

Another neighbor said that about two months ago, he saw Castro Díaz-Balart waiting at a bus stop in the neighborhood, and another saw him walking around Kohly.
If any of the death versions are true, it would help explain why the official press reacted so quickly to announce the suicide and share details about his depression with the population.

Reached by phone in Havana, Fidel Antonio Castro Smirnov — the son of Castro Díaz-Balart with first wife Olga Smirnova — said he would not make statements to the press and asked for “respect for the privacy of the family at this time.”

In Miami, Juanita Castro, sister of the current ruler Raúl Castro and the late Fidel Castro, said she did not know the details of her nephew’s death. Mirta Díaz-Balart, Castro Díaz-Balart’s mother and Fidel Castro’s first wife, lives in Spain but travels to the island frequently and was “on her way to Cuba and probably already there,” Juanita Castro said Friday. She said she lamented the death of her nephew but would not be attending the funeral. According to the official announcement and a statement by the Cuban Foreign Ministry, the funeral will be strictly family, not a state ceremony.

On the island, news of the suicide did not raise eyebrows.

Cuba has one of the highest rates of suicide in Latin America with 17 deaths per 100,000 inhabitants, according to the World Health Organization. According to Cuba’s most recent statistics, in 2015 there were 2,535 deaths “due to self-inflicted injuries,” the eighth cause of death that year, above diabetes and cirrhosis of the liver.

Fidel Castro Diaz Balart committed suicide

Fidel Castro Diaz Balart (Fidelito), oldest son of Cuba’s dictator Fidel Castro committed suicide on Thursday.

The news was confirmed by Cuba’s official press on Thursday Evening.

According to news reports, he had tried to commit suicide three months ago using a pistol but was stopped by his bodyguards. This time he jumped from a high floor of the hospital where he was being treated for depression.

He was 69 years old.