Written by Karen Strohecker
LONDON (Reuters) – The Maldives has chosen U.S.-based Centerview Partners as its debt adviser as the country struggles to avert a financial crisis, two sources familiar with the situation said.
Fears have grown in recent months that the island nation could become the first country to default on its Islamic sovereign debt as the government faces a $500 million sukuk maturing in 2026 and dwindling foreign currency reserves.
According to the World Bank, the country’s total public and publicly guaranteed debt reached $8.2 billion, or 116% of GDP, in the first quarter of this year.
World Bank data show that about half of this amount is external debt, with a large portion of it owed to regional rivals China and India, which provided loans worth $1.37 billion and $124 million, respectively.
The two countries have in recent weeks strengthened their support for the Maldives, alleviating investors’ concerns about the debt crisis and helping boost its international bonds.
Beijing signed a financial cooperation agreement with the Maldives in September to boost trade and investment. India subscribed to $50 million in Maldives treasury bonds last month and said in October it had agreed to currency swap deals worth more than $750 million.
The Maldives’ only Eurobond, which fell to 66 cents on the dollar in early September as debt concerns worsened, is currently trading at 80 cents, TradeWeb data showed.
This is well above the 70 cent threshold, below which debts are considered distressed.
Investment and advisory firm Centerview Partners, founded in 2006, has recently been seeking to grow its sovereign advisory business, and has been hiring extensively over the past year to bolster its global operations in both Paris and New York.
The Maldivian government did not immediately respond to a request for comment.