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Feb 9, 2016

Municipal Bond Performing Well…But No Plans to Refloat

Darrell Bradley

In November 2012 Mayor Darrell Bradley did the unprecedented. He launched his twenty-million dollar municipal bond to finance a massive infrastructure project in the city. Today he told us that the Council’s management of the bond has been spectacular…so spectacular in fact that he says investors have lined up to reinvest their monies. Still, says Bradley, while the bond is designed to be refloated periodically, they haven’t done so. He says he doesn’t exactly know why.

 

Darrell Bradley, Belize City Mayor

“All of our projections show that everything is working very positively. We’ve paid interest and principals in June and December and it’s two and half years…we’ve paid maybe about; that would have been five interest payments to all the investors for the entire yield. And everybody seems to be satisfied with the bond to the point where when we had the majority with that first two million dollars, all of the people who were there asked us to reinvest with the city. So that people felt very comfortable with their repayment and their interest that they felt satisfied in wanting to go and reinvest their bond. We couldn’t do that at the time and we still haven’t done that. So actually we are saving more because of course when we retire any portion of the municipal bond, we don’t have to save for that portion. So that the bond is…because we had actually factored in there that we would have refloated the bond. Because we didn’t refloat the bond, the money that we are actually saving in the sinking fund is going to be in excess because we had always forecasted that the municipal fund would have been a revolving fund so that municipalities every two years could have done a two million dollar project; every five years, you could do a ten million dollar project. And because that’s not the case, you don’t have that liability in terms of the two million dollars additional and we are still saving the original target. So that at this present moment, even though we only owe eighteen million dollars, because we’ve already paid back two million dollars out of it, we are still saving as if we owed twenty million dollars.”

 

Reporter

“And why wasn’t it refloated?”

 

Darrell Bradley

“Well it wasn’t refloated because at the time…I can’t speak to exactly why it wasn’t refloated. We would have wanted to refloat it because it is part of the design to do it because that allows the municipality to do more streets. I suspect you are going to ask me about streets right now and we could have had two million dollars and that would have paid to do at least ten more streets in Belize City. And every two years we would have continued to do this. And what that would have done is at the end of a period of time, all the streets in Belize City would have been completed; you just do it through a process. I can’t exactly speak to why that was not done, but it just wasn’t done.”

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