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Jun 21, 2012

Bloomberg unsuccessfully tries to get answers from bond team

Last week, the Prime Minister informed the nation that the government was seeking to restructure its five hundred and forty-seven million US Dollar super bond because it simply cannot afford to continue to pay. News Five reported that an Ad Hoc bond committee representing bondholders has already been formed out of concern for a possible default. The committee has signaled that any debt restructuring should not result in current value losses to the group. Today’s Bloomberg News is reporting that talk of restructuring the super bond for the second time in five years has “stoked the biggest bond decline in emerging markets.” There are few details available on the restructuring and according to the reports neither the Financial Secretary nor team leader, Mark Espat, are offering comment. There is, however, the latest report issued by the government finance team on the Central Bank of Belize website, which suggests that the country is facing sizable financing gaps.  In fact by publishing the dire forecasts, the government is signaling to the Ad Hoc Committee which is holding three hundred million dollars of the debt, that there are severe financing shortfalls starting in 2013, going through 2019 of a total of eight hundred and two million US dollars.  The figure includes compensation payment to the previous owners of Telemedia and to Fortis for B.E.L., on which G.O.B. is putting a value of only eighty-five million US dollars, while the previous owners have placed it much higher. According to calculations, the annual shortfall or the amount of annual gap for the financial year starting next year will be one hundred and twenty two million U.S. dollars and thereafter, one hundred and thirty, followed by one hundred and thirty-six hundred million through seven years.  These shortfalls annually amount to eight percent of G.D.P.  If, however, the amount that the owners of the utilities are asking (four hundred and fifty million U.S. dollars) is taken into account then it goes up to eleven point three percent of G.D.P.  These are pretty scary numbers staring at Belizeans.  The bigger question is, however: Is the country and government of Belize Bankrupt?

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7 Responses for “Bloomberg unsuccessfully tries to get answers from bond team”

  1. Mike says:

    Super Bond Holders are not to be blamed for these additional debts. Why did Barrow nationalize these utilities if he didn’t have the money to pay for them?

    Solution:
    Find a suitable and credible foreign investor and sell the utilities to them. France Telecom, for example.

    Find a reputable company that is not affiliated with politicians, and that has a good track record at providing good service for customers.

    We need investors in Belize: AAA-rated investors like Telecom France.

  2. KISHORE MAKHIJANI says:

    I DON’T KNOW ABOUT BEL BUT BTL IS STILL A PROFITABLE COMPANY.THE COMPENSATION CAN BE PAID CONSIDERING THE PROFITS TO BE MADE BY THE COMPANY IN YEARS TO COME.OFCOURSE THE COMPENSATION SHOULD BE PAID ON THE BASIS OF LAST THREE YEARS BALANCE SHEET PROVIDED BY THE COMPANY PRIOR TO NATIONALIZATION.

  3. Mike says:

    KISHORE, you are absolutely right. That is how it should be. Utilities should be paid to the former owners from their own profits. And NOT get Creditors involved in this matter.

    Super Bond Creditors have nothing to do with the arguments presented by the Central Bank’s “Economic and Financial Update June 2012″.

    This same report should be presented to the former owners of the Utilities so they can understand how much they can realistically expect to get paid.

  4. Storm says:

    I just did the math, and we are paying about $275-million ANNUAL INTEREST [Belize dollars] until 2019.

    THAT INTEREST ALONE IS ALMOST $1,000 FOR EVERY MAN, WOMAN, AND NEWBORN BABY EVERY YEAR!!!

    Whatever was done with the principal that was borrowed, do YOU feel it was worth paying $1,000 interest for each and every member of your family, every year? And at the end of all those interest payments, the entire original balance is still due, owing, and unpaid!

    We had catastrophic leadership, and none of us cared to watch the cookie jar. A doubly hard lesson for us and our children: [1] we have to pay this crushing interest, and [2] paying for yesterday’s reckless spending binge leaves us less to spend on today’s actual needs.

    What a sorry state we voted ourselves into.

  5. 5000 dollar low interest loan says:

    Just go around and knock on doors of investors

  6. Mike says:

    KISHORE, you are absolutely right. That is how it should be. Utilities should be paid to the former owners from their own profits. And NOT get Creditors involved in this matter.

    Super Bond Creditors have nothing to do with the arguments presented by the Central Bank’s “Economic and Financial Update June 2012″.

    This same report should be presented to the former owners of the Utilities so they can understand how much they can realistically expect to get paid.

  7. Louis says:

    Storm, your numbers are incorrect. The Super Bond is a $540 million USD issue, currently at 8.5% annual interest.

    $540 million X 0.085 = US$45.9 million interest payment every year.

    Not 275 million as you claim.

    The rest of Belize’s debt is internal debt, multilateral debt and country to country debt.

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