Maldives picks US Centerview as adviser on debt management

Maldives has appointed US-based Centerview Partners to provide advisory services on its debt matters as the country navigates financial challenges, according to two sources familiar with the situation, as reported by Reuters.

Recent concerns have emerged over the potential risk of the Maldives becoming the first nation to default on its Islamic sovereign debt. This comes as the government faces the maturity of a $500-million Sukuk in 2026 amidst shrinking foreign currency reserves.

According to data from the World Bank, the Maldives' total public and publicly guaranteed debt stood at $8.2 billion in the first quarter of this year, equivalent to 116% of its Gross Domestic Product (GDP). Nearly half of this debt is external, with significant portions owed to China and India, who have extended loans of $1.37 billion and $124 million, respectively.

In recent weeks, both China and India have provided support to the Maldives, which has helped ease investor concerns about a potential debt crisis and stabilise the country's international bonds.

Beijing signed a financial cooperation agreement with the Maldives in September to bolster trade and investment ties.

Meanwhile, India subscribed to a $50-million Maldives Treasury bill last month and approved currency swap deals exceeding $750 million in October.

Maldives' only international bond, which had dropped to 66 cents on the dollar in early September amid heightened debt worries, is now trading around 80 cents, according to Tradeweb data. This level is above the 70-cent threshold, which is generally considered a sign of distressed debt.

Centerview Partners, founded in 2006, has been expanding its sovereign advisory business in recent years, enhancing its global operations in Paris and New York. The Maldives' government has not yet provided a response to a request for comment.