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Feb 22, 2017

Lord Michael Ashcroft Makes Dire Predictions About Superbond

A News Five team is in Washington where an exclusive interview was conducted earlier today with Lord Michael Ashcroft.  A number of issues of national importance were discussed during the lengthy dialogue, including recent judgments on the outstanding arbitral awards, as well as the ongoing Super Bond negotiations.  Since the prime minister’s return from New York on Sunday, much has been said about government’s failure to defray the twenty-six million dollar payment towards that outstanding national debt.  That sum was due on Monday.  Instead, Prime Minister Barrow anticipates that an agreement between government and bondholders will be met in the coming weeks, well ahead of the expiration date of the thirty-day grace period.  On Tuesday, Opposition Leader John Briceño weighed in on the matter, rendering an image of pending economic hardships.  Tonight, we begin with insight provided by Lord Michael Ashcroft on the negotiations for Super Bond 3.0 and the possible consequences should Belize default on the payment.

 

Michael Ashcroft

Lord Michael Ashcroft

“I would expect that what they are doing at the moment is fairly routine. they’re saying, I would suspect, that we must have better guarantees this time; that there’s not going to be a fourth one coming down the line. Therefore, we would like an IMF program in place to ensure that there is a better chance that we get our money. That of course, from the government’s point of view, is very difficult. That merely confirms that the economy has got to a particular point where you need to call in the IMF and that has political consequences. Failing that, you’d expect them to say well okay, if it is not the IMF that monitors, what about we as the bondholders monitor the economy and have certain rights. That again, to government’s point of view, is they don’t particularly want bondholders to have any particular rights over the economy—the direction it holds—and as a condition of the restructuring. So there’s a game of spoof that starts to get played, a dangerous game of spoof on both sides. The government clearly doesn’t want to default because that simply means that eventually the bondholders, who hold the bonds, will start to exit to the vulture funds of the United States whose specialty is extracting funds from governments that have defaulted. And it took one vulture fund in the United States fifteen years to get their money out of Argentina. And so that’s not where Belize wants to go; its credit rating would be smashed in the international markets. The bondholders, from their point of view, don’t want to take further losses. So as in any negotiation, Belize will take advantage of the thirty-day grace period and then it will be at that stage, whether the bondholders will just go forward or will say okay, we’ve had enough. We actually believe that we are not going to agree with this for the time being or they may even give Belize a longer period of time to discuss things. So it is a delicate and a difficult situation for both sides at the moment.”

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