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Mar 3, 2017

G.O.B. Heavily Revises Terms of Superbond Negotiation in Major Concession to Bondholders

We begin with breaking news. Just before news time, the Central Bank of Belize released a statement confirming major and extensive revisions to the Government of Belize’s proposal to restructure the Superbond and extending the expiration date for the Consent Solicitation Offer originally issued on January twelfth. This was followed by a release by the government.  The offer now expires on March tenth, while the amendments were revised as of March second. According to the statement, the interest rate on the 2038 Bonds is now set at four point nine three seven five percent commencing February twentieth, up from four percent. The revised principal amortization schedule now calls for five equal annual instalments commencing on February twentieth, 2030 and ending on February twentieth, 2034 (rather than three equal annual instalments commencing on February twentieth, 2036 and ending on February twentieth, 2038, as proposed in the January twelfth, 2017 Statement). The final Maturity Date of the Bonds is being advanced from February twentieth, 2038 to February twentieth, 2034. Belize is undertaking to achieve a primary surplus equal to at least two percent of GDP in each of the fiscal years 2018/19, 2019/20 and 2020/21. If Belize fails to meet that primary surplus target in any of those years several things happen. First, interest payments on the Bonds for the subsequent twelve months will be payable quarterly rather than semi-annually; and second, Belize will seek the assistance of the International Monetary Fund in analysing the reasons for the failure to meet the primary surplus target and will ask the IMF to make recommendations regarding appropriate remedial measures. The IMF’s assessment and recommendations will be made publicly available. Finally, Belize is agreeing that it will apply twenty-five percent of the gross proceeds (in excess of fifty million U.S. dollars) of certain new foreign currency borrowings contracted after March second, 2017 to reduce, by purchases in the secondary market or otherwise, the outstanding principal amount of the 2038 Bonds. The bondholders now have one week from today to formally respond.

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1 Response for “G.O.B. Heavily Revises Terms of Superbond Negotiation in Major Concession to Bondholders”

  1. Carlos says:

    Pick sense out of nonsense! It’s sad when Belizeans refuse to react in a unified manner for their country and future generations.

    Bond holders and Belizeans should reject Dean Barrow’s proposals to delay payment for 20 years. Everyone should demand answers from Dean Barrow and GOB as to why they are unable to repay these loans. When these loans were acquired, GOB expressed every intent and ability to repay. What makes anyone think that Belize will be able to pay in the future – when the amount will be greater?

    Belizeans should note that based on current lifespan statistics, Dean Barrow and many of his accomplices will be deceased by 2036. This means he attempting to delay this bond bomb until after he is dead.

    There may be no payment until 2036, but the interest will accrue during that time, which means the total due will be much more expensive in the future.

    The GOB has done nothing with the loans to fully develop and enhance the standard of living in Belize. Belize per capita income has not kept pace with its Central American counterparts. A road here and there is cosmetic – it doesn’t put food on the table or money in the bank for retirement.

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