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Aug 14, 2012

Government unable to pay August Superbond coupon

Carl Ross

The Superbond negotiating team dropped a financial super bomb on bondholders. In a release that was posted on the Central Bank of Belize’s website this afternoon, G.O.B. said that it is unable to meet the August twentieth coupon payment of the Superbond.  The payment is for forty-six million Belize dollars, due next week Monday or within a thirty-day grace period which ends on the nineteenth of September.  According to the release, “The Government of Belize announced today that it is unable to make an August twentieth, 2012 coupon payment on the country’s U.S. Dollar Step-Up Bonds Due 2029. Belize has already commenced discussions with the holders of this bond regarding a consensual restructuring of the instrument.” According to the release, “The Step-Up Bond alone represents approximately one-half of Belize’s total recorded public indebtedness”. News Five’s attempts to contact Prime Minister Dean Barrow and Financial Director Joseph Waight were unsuccessful. However, we were able to reach the Managing Director of Investments for Oppenheimer, Carl Ross who says its bad news for investors while the government is quote “taking a very hard-line approach to the debt restructuring.”

 

Via Phone: Carl Ross, Managing Director of Investments, Oppenheimer

“For bondholders, it’s obviously a bad sign. This coupon payment that’s coming up is one half of an eight and half percent coupon. So it is a lot of money and it is a very meaningful coupon payment for bondholders. So it is a very negative sign. What it means for the government is that the government is taking a hard-line approach to this debt restructuring.  It is certainly taking a risk that is going to alienate the global financial market for a very, very long period of time. I think it’s an important signal that there is probably very little room for negotiation in the government’s mind. It is not unprecedented what they are doing, but it’s certainly a very blunt instrument; a very hard-line approach.”

 

Jose Sanchez

“The Prime Minister, Dean Barrow has said, “The annual interest rate on the bond stepped up earlier this year to eight point five percent. We simply cannot afford this coupon payment given the financing shortfalls and other challenges we face.” Does that bring any clarity to the bondholders that maybe it is not even a hard-line, but that they just need to have some further discussions?”

 

Via Phone: Carl Ross

“I think it is important for me to say that I am not a bondholder and my company is not a bondholder. We have an interest in this process because a lot of our clients are bondholders. So with that, I would say that what bondholders are finding difficult to understand is that yes, every country in the world right now virtually have financial shortfalls. Virtually every country in the world is in recession or near recession. And nobody, no government out there has as much money as they need—at least very few governments. So in the context of that, actually Belize’s situation doesn’t look as bad as many other countries that bondholders own. So it’s a little bit, in the eyes of bondholders—which I am not—it’s a little bit difficult to understand and a little bit difficult to accept.”

 

Jose Sanchez

“But clearly it is not a default. They haven’t made a payment, but they are not saying that they are defaulting on the bond; they just want to have further dialogue. Do you think this is possible?”

 

Via Phone: Carl Ross

“I think that they dialogue has become more difficult now that the government has taken this approach of saying that we cannot afford to meet this coupon payment. I think if they were to meet this coupon payment, the dialogue with bondholders would be much more amicable and much more fluid and much easier. If the government does not meet this payment, they enter a realm of; I would say more animosity and more an adversarial approach. Now according to bond documentation, there is a thirty-day window to pay the coupon beyond the coupon payment date. So I think Belize won’t be officially in default until that thirty-day window—which will be sometime in September—passes. And maybe that’s what the government’s up to. I don’t know; you’ll have to ask the government that, but it could be possible that they are just using the window to send a message that we are very serious about our restructuring here and we want a deep haircut from bondholders.”

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19 Responses for “Government unable to pay August Superbond coupon”

  1. Rod says:

    This is because barrow has spent half he money on his vacations in Miami beach and the rest of the irruption ministers have spent the rest on themselves how useless and embarrassing this udp pm and gov are.

  2. Louisville,Ky says:

    Belize dah noh di fuss an ‘e noh wah be di lass. If the PM is telling these people; look man, we need to restructure this thing so that it is not so burdensome on my people, and yet they refuse to compromise, then this is what happens.
    It is not as if he does not want to pay, the PM is saying he cannot afford to pay the agreed upon amount. So, let’s revisit the payment schedule and ‘slaken’ this noose from around our necks. What part of that do these bond holders not understand? Okay then…….
    I ku tell deh eena kriol if dat wah help.

  3. Vuk says:

    I shudder to think what will happen if Belize actually defaults, especially under the circumstances of the current international situation.

  4. Sam says:

    Why don’t they dig up the vault and take out some of the revenues that they got from b.n.e.god bless Belize our beloved country

  5. Louis says:

    Who would want to do business in Belize if we default on September 19?

    This will affect all of us. I am ready to pull my money out of the bank any moment, and so should other readers.

  6. me says:

    This PM is useless,
    Yes grab bel, grab water, the spoils are for the udp and cronies the actual payment are for the people to pay, this pm really have gaines jail time .(big time)

  7. Elgin Martinez says:

    Use the money that is allocated to the gang members to help pay the superbond.

  8. tactics says:

    I think the bond team is saying they will force a negotiation for Belizeans to pay less. Why would anyone want to pay more? ………………..

  9. Concerned Belizean says:

    If the country has no money…..why are ministers, their family members and cronies traveling first class??????
    I am frighten to think what will happen to Belize if we default…..innocent Belizeans will suffer because of the dumb decisions of their leaders!!!!! God Bless Belize!

  10. ROMNEY says:

    HEY Belizeans this is what happens when POLITICIAN give themselves & ASSOCIATES BIG TAX BREAK along with big CONTRACTS, there is not enough money comming from MIDDLE CLASS or POOR People to collect to help the DEFICIT. Before you negotiate Interest Rate, you have to know that you will be making a profit or you will be in the HOLE. LOOK AT ME.

  11. BA says:

    ROD FOR p.m. !!!!!!!!!!!!!!!!!!!!!!

  12. sammie says:

    Who is paying for his wife medical bills. My health insurance pays 80% for major surgery.I recently had surgery, I was in the hospital for 1 week with 8 weeks of physical therapy. My out of pocket expense was almost $7,500. I know his wife medical bill has to be extremely high, and I am sure she is getting the best money can offer. So who picks up the tab for her care, while the Belizean people get screwed over.
    Why did the people elect him again when he has been done nothing for them.

  13. Law-And-Order Kriol says:

    Problem is that PM had said a while back that the money for the August payment was set aside. So now how are bondholders to believe that Belize is negotiating in good faith? Also don’t forget the campaign rhetoric against bondholders (as opposed to against legitimate political opponents). And finally, the bondholders are well within their rights to point out that GOB was well aware of its impending obligations when it went ahead and acquired BTL and BEL, as well as doling out tens of millions of dollars persuing with Mr. Ashcroft.

  14. Small Li Belizean says:

    What does all this mean for the small Belizean?

    Devaluation, Higher Taxes, Even Less Jobs, No More Bank Loans, WHAT ? ? ? ? ?

    We want to know how this will hurt or help us the common man & small businessman.

    How did this superbond get started, and by who, and what has it done for Belize ? ? ?

  15. stdev28anova says:

    How about the money Finegan gave to the drive for building a rehabilitation center….that could have helped pay the super bond.

  16. Elgin Martinez says:

    I’ve got an idea,freeze the PM’s assets.

  17. Gapi says:

    I am not a normal person, I think me and my faamly could help with this bond ting.

  18. reggie says:

    where is the 50 millions he got from central bank

  19. marvin says:

    personaly i think that Belize need a control or a reform in the governance it has. It is so painfull to say this but all of our leaders in some way or the other have taken our money, and it is so sad that we Belizeans are so blind with RED and BLUE not seen that they are the problem. The persons in the Cabinet are gods of the country, they do whatever they want without a single control. The result in all of this is us Belizeans having a downward in our economy and more crime. Stop Stealing Belizeans money and Belize will Prosper and grow.

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