Barbados is exploring a potential liability management exercise with its local bond investors, the Caribbean nation’s Finance Minister Christopher Sinckler told LatinFinance.

‘It is early days,” said Sinckler. “Any exercise, if we do one, has to be voluntary. It is not going to be distressed or forced. We are not going to engage in that.”

Barbados is grappling one of the region’s heaviest debt loads, which S&P Global Ratings estimates to be near 140% of the country’s GDP. Last month, the ratings agency downgraded the island to CCC from CCC+, citing the ballooning debt load.

Sinckler said any liability management exercise “would only” involve domestic investors. 

“There is no immediate or natural need to engage any exercise or debt restructuring on the foreign debt,” he added. Barbados’ foreign debt represents roughly 28% of its total debt, Sinckler said.

“One of the things we have determined that we absolutely are not interested in doing, even on the domestic side, is a natural haircut on the net present value on the debt,” Sinckler said. “That’s not in our wheel house.”

S&P also left Barbados with a negative outlook and said any domestic debt exchange reflected a potential balance of payments crisis that could trigger further downgrades.