The first-ever triggering of a government bond “hurricane clause” by the Caribbean nation of Grenada has thrown a spotlight on the push for more countries to pause debt payments when natural disasters strike.
Grenada told investors in its $112mn bond this week that it will suspend $12mn in interest over the next year as it recovers from Hurricane Beryl, which wrecked outlying islands last month.
The trigger of what was the world’s first disaster “pause clause”, when Grenada inserted it in its debt almost a decade ago, will be a test case for the effectiveness of these tools. Even other hurricane-exposed small island nations have largely held off adopting similar clauses, despite growing encouragement by official lenders.
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