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Aug 16, 2012

Bond default may affect investment in Belize

Last week, the government published three restructuring scenarios for the 2029 Superbond. Those scenarios were followed up by an announcement that the government would not be able to pay the August twentieth coupon. An assessment of the situation released by Nomura Securities noted that the Prime Minister’s budget presentation indicated that the government had provisioned the payment of the next two coupons of the Superbond. So Nomura sees the government’s recent announcement of its decision not to pay the coupon as, “tantamount to a strategic default, akin to Ecuador’s 2008 default.  As negotiations with bondholders are unlikely to be over by September nineteenth (the end of the grace period for the coupon payment), we believe that Belize will actually default.”

 

The Nomura consultant went further to say that there are questions that need to be answered such as whether or not Belize is interested in regaining market access; as well as the implications for the private sector.  Specifically the Nomura analyst said, “We believe that Belize, a country with a lack of domestic savings, should strive to attract foreign direct investment, and both the public and private sectors should be able to borrow abroad. Otherwise, the country’s potential GDP growth is likely to suffer, further pressuring already poor social conditions.”

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10 Responses for “Bond default may affect investment in Belize”

  1. Louis says:

    Of course a default is going to affect Belize.

  2. no news says:

    A month ago there was only one listed country worse than Belize for bond rating, Greece.

    The real question now is whether after Belize beats Greece for the worst credit rating in the world, it will be delisted altogether and join Zimbabwe and North Korea as having worthless credit run by tyrants.

    Unlike Greece, who has a long history and a lot of European countries working to straighten their mess out. What is Belize’s plan? ran off the Brits and the US govts. get the Mexican or Columbian drug cartels to sort it out, they have money? Venezuela? Guatemalans? Porn business? Space aliens?

    Keep messing with Slovakians and the EU, don’t send Mello back. Show them you got it all under control.

  3. Ricky Malthus says:

    Barrow and Espat have taken the foolish way of the foolish virgins to solve this bond fiasco. Every day many countries all over the globe renegotiate and reschedule their loans with their lenders to their mutual advantage where there is a win-win situation. Why do Barrow and Espat have to act like financial and economic Neanderthals? Then again, where are the bright boys from Central Bank and ministry of Finance to challenge this foolishness? Are these people there just for the ride? They must challenge or resign their jobs or retire or contract terminated in best interest of the public? Why must the people suffer so much and having so little?

  4. BMNJ says:

    Because there’s no accountability and transparency with the GOB, whether it’s the PUP or the UDP in power, that’s why this country is in this mess right now.
    This also reminds me of all the baloneys and fiascos with Intelco, DFC, UHS, SSB, and the recent scandal with KHMH. They all have several things in common – corruption, mismanagement, personal enrichment, greed, and public deception.

  5. Storm says:

    Hon. Barrow is steering Belize off the fiscal cliff with his election to default on the bond. That will make it essentially impossible for the nation to acquire normal credit, at least until there is a change to a government that has an opposite policy, one that will make an effort to regain confidence in Belize.

    Pres. Correa in Ecuador did the same thing in 2008, chose to default on bonds when it was not necessary. He did it to strike back at capitalist nations, and chose to sleep thereafter with Communist China and Bolivarian Socialist Venezuela. Is that Barrow’s plan, too, to line up with the Red Chinese, who are trying to buy influence throughout the world? They are the only nation that props up Zimbabwe and North Korea, too — great company for us to join.

    Or is Barrow even looking down the road a few months?

    BELIZE NEEDS ANSWERS. Where is the money that was budgeted for the coupon? What will the government do for future credit needs — which it surely will have. Nobody in the normal markets will lend us a shilling after they see we decided not to pay even the interest on the Superbond. Has Barrow made a finance deal with China or Venezuela, or some other sponsor of pariah nations, like Iran? If so, at what price?

    If Barrow thinks that his “strategy,” possibly conceived at the bottom of a bottle of rum by all appearances, will help the nation, he needs to explain it and reassure us. Negotiating lower interest payments might have been possible if we had paid this coupon, but I doubt it will be possible now.

    I fear we are on a ship of fools, captained by the biggest fool.

  6. Hatari says:

    Like so many other social and economic problems in Belize, our powers-that-be do not have the education, knowledge or experience to deal with such matters. Dis da Belize! When will we ever wake up and realize that we can no longer bluff and macho our way through the 21st century. I say we hire a qualified property management company to run the whole damn show. There are management companies that run housing projects bigger than Belize . . . and make a profit doing so! Radical concept? Yes, but we need radical concepts to pull us out of this mess.

  7. Storm says:

    Hatari for PM.

  8. Louis says:

    You know what’s going to happen if the Superbond gets accelerated. Such a foolish PM.

    “They are raising the stakes. We have strived to take a measured approach in responding,” AJ Mediratta, a partner at Greylock Capital Management and chairman of the creditor committee, told IFR. “The committee wants to be constructive; we control a majority of the 2029 bond, and think their actions are unnecessary and provocative.”

    The committee is now considering appropriate actions next week including instructing the Trustee to accelerate the bonds, Mediratta added.

  9. Louis says:

    “It appears the country isn’t receiving good advice. We are continuing to organise ourselves and expect proper discussions to take place. We have asked for information and are waiting to receive it,” said Mediratta.

    The coordinating committee and its advisors have been convening weekly to discuss the situation, but see no point in holding negotiations with the sovereign until it makes its debt sustainability analysis (DSA) public, said Mediratta.

    “If we don’t see their assumptions, we don’t know if they are being reasonable or not. And, as we have said from the beginning, we are prepared to be reasonable but they first need to make the case for it.”

  10. Josephino Estroberto Pesomedio says:

    Well… vote UPD, bring in more GUATS , give them free nationality so we have more mouths to FEED. As it is right now, we either feed them with our jobs TAKEN away by them or by their GUNS!!!
    Vote Barrow, and get trampled by downward scums wearing guns in their pockets !
    In turn let a Belizean go to Guat and work illegal to see how he gets KILLED !!!

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