Superbond Negotiations Conclude; Adviser Says Result is “Win-Win”
Belize and holders of the Superbond have hammered out an agreement to restructure the terms of the notes for the third time in a decade. After months of negotiations, a committee representing the majority of bondholders has endorsed a revised proposal from Belize that reduces the interest rate on the note and shortens its maturity. Bowing to investor pressure for better oversight over the country’s economic management, Belize also agreed to seek assistance from the International Monetary Fund if it fails to meet certain fiscal targets over the next four years. The original proposal, put forward through a consent solicitation in January, was rejected by creditors who argued it would reduce the net present value of the bond by over forty percent. The committee on Friday urged bondholders to approve the revised consent solicitation, which now expires on March tenth. News Five spoke via telephone to advisor Charles Blitzer on the prospects for the deal succeeding in the medium and long term.
On the Phone: Charles Blitzer, Blitzer Consulting
“We support this exchange, because the Government is making commitments to adjust its fiscal stance, to reduce fiscal risk going forward, to improve debt sustainability. And compared with the original proposal in January, the terms are somewhat better.”
“Now there are observers who have speculated or questioned why is it that the bondholders would choose to negotiate with the Government – you could have just easily turned and walked away and said, ‘We’re satisfied with what we’ve got at this point – you’ll just have to make your own way.’ Can you address that aspect of it for me?”
On the Phone: Charles Blitzer
“I’m not sure what that concern is; the Bondholders’ Committee’s responsibility is to negotiate in good faith with the Government – the Government’s responsibility is to negotiate in good faith with the Committee, and that’s exactly what occurred. And I think the final agreement represents a positive step forward.”
According to the revised terms, the new note will pay a coupon of four point nine-three-seven-five percent, slightly below the current five percent and much lower than the six point seven-six-seven percent rate that is scheduled to kick in from August twentieth. In addition, the bond’s final maturity will be brought forward to 2034 from 2038, while the amortization schedule will be changed to five annual instalments starting in 2030 from the thirty-eight semi-annual payments currently scheduled to begin in 2019.