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Dec 5, 2012

Super attorneys contracted by bondholders

As was reported on Tuesday, superbond negotiations between bondholders and the government have hit a major snag. The bondholders have rejected government’s latest counter proposal and have hired a team of lawyers including the former US executive director of the World Bank as an advisor, which according to the Financial Times, “Is a clear warning shot to highlight that litigation could soon be on the cards.” Many analysts opine that the country is not following the right recipe with regards to its debt problem. The chain of events that led to the rejection are as follows:  On August twentieth, Belize missed a twenty-three million dollar coupon payment due to creditors on the five hundred and forty-four million ‘superbond’. This was followed by several downgrades by international rating agencies that placed the country into a ‘default’. After the rejection of what was seen as more than a fifty percent discount on the original value of the bond, the Government then offered to pay half of the amount due with a grace period of sixty days.  On November twenty-first, a counter proposal was offered by the bondholders, which offered some debt relief of more than one hundred and fifty million. This was turned down by the government and a counter offer was submitted on November twenty-ninth; that was out rightly turned down by bondholders on Tuesday. In essence, the government finds itself in a very precarious situation. It is claiming that it is in financial stress; however, the IMF recently completed its yearly review of the country’s economy and concluded that, “Belize is experiencing an output rebound despite decline in oil production. In 2012, real Gross Domestic Product (GDP) growth is expected at three point five percent to four percent.  The IMF also suggests that the government’s primary surplus target of two percent of GDP is within reach.” This is contrary to the government’s position that it is unable to meet its debt obligations. At the same time, the US Treasury has blocked Belize from funding via the Inter American Development Bank. In the statement released on Tuesday by the bondholders, their analysis complements that of the IMF, in that they also point to a stronger forecast for growth which differs from that of the Government.  The IMF statement highlights the need for stronger and sustained economic growth which could be achieved by sound macroeconomic policies and renewed structural reform efforts aimed at underpinning private sector development and attracting foreign direct investment.

Meanwhile, reports from the Financial Times, UK; the Wall Street Journal, Reuters among other analysts, conclude that the country’s recent economic improvement could jeopardize its case for such a large debt reduction.  So for now, the pressure is intensifying on the government.

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4 Responses for “Super attorneys contracted by bondholders”

  1. Joe says:

    Belize economy is in an insolvent state, file for bankruptcy and
    Restructure the payment the only way out

  2. Sergio says:

    So who are the super attorneys your headline was talking about?

  3. Storm says:

    PM Barrow is not unable to meet the debt, he is just unwilling. He seems to think that by chancing the creditors he will be a hero — to whom? Gangsters and thieves? Not to the taxpayers of the Jewel, nor to the future generations that will be saddled by his idiotic performances and decisions.

    Now the creditors have hired a “dream team,” and they will likely drub our inexperienced team in each and every forum. Even assuming the best of intentions for our team, it has no experience — and the road to hell is paved with good intentions.

    In the end, the bond contracts say that the loser of any litigation will pay for the winner’s attorneys, so we will end up paying for the bondholders’ dream team as well as our own lawyers.

    Hon. lawyer Barrow seems to make the worst decision at every turn — is he self-destructive? Sadly, his bad decisions will destroy us and our children, and our chance for a little prosperity in our short lives. Why did we elect him? Even if UDP is thought to be marginally better than PUP, there are better, less reckless reps who could and should have been PM.

    The Jewel

  4. Alfonso says:

    Denys, Lois, Dianne, Rodwell!

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