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Nov 18, 2016

Bondholders’ Committee Formed, Will They Drive a Hard Bargain?

As requested by the Government of Belize, representatives of key holders of the U.S. Dollar 2038 Bonds, the Superbond, have agreed to form a committee to discuss the restructuring of the more than five-hundred-and-thirty-million U.S. dollar package. A statement on behalf of the bondholders notes that the restructuring completed in 2013 has provided more than one hundred million U.S. dollars in debt relief to date, and the committee will be evaluating the Government’s statements and expect them to negotiate fairly and honestly according to established principles. The Committee is being advised by BroadSpan Capital LLC, as financial advisor, and Blitzer Consulting as special advisor. The principal of the latter firm, Charles Blitzer, is a sovereign debt consultant who has reputation for driving hard bargains.

Charles Blitzer

Blitzer was an advisor for investors restructuring an arrangement with the government of Argentina. Reports have since noted Blitzer’s intervention on behalf of the investors and his hard-line approach to such negotiations. The restructured bonds were issued in 2013 in what was then the country’s second restructuring in a matter of years. The bonds carry a step-up coupon that climbs from five to about six point seven percent in August 2017. The Government is seeking an adjustment of the terms and conditions of the present agreement with bondholders on the million-dollar Superbond and hoping to reduce payments and increase the lifespan of the bond beyond 2038. In the backdrop of this, the Government said this month that, “Belize’s economy has significantly under-performed in comparison with projections used at the time in setting the terms of the 2038 bonds.” In related news, Standards and Poors lowered the country’s rating on Monday to C.C.C. plus from B minus, noting that fiscal and external balances have impaired Belize’s ability to meet its financial requirements. S and P said, “The sovereign’s debt servicing capacity has become more vulnerable to potentially worsening external, financial, and economic conditions, which could reduce its capacity and willingness to pay on its commercial bond.”

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