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Feb 12, 2013

Superbond restructure passes through House

The House of Representatives passed in one sitting today, the terms of the restructured superbond; it goes before the Senate this Wednesday. The Opposition complained it had not been privy nor consulted on the new debt terms of the one billion Belize dollar superbond so there was little debate on the bond itself and by early afternoon, the external debt restructuring got the nod of the House.  Prime Minister Dean Barrow disclosed an extension in maturity and lower coupon payments. News Five’s Jose Sanchez has details of the restructuring.

 

Jose Sanchez, Reporting

A special sitting of the House was called for passing the bill to restructure the superbond. Prime Minister Barrow explained that there is close to a decade added on to the payment plan; over a hundred million US dollars written-off the debt; and current rates are a forty percent reduction under previous terms.

 

Prime Minister Dean Barrow

Dean Barrow

“A twenty-five year maturity ending in 2038. This is nine years more than the current maturity under the superbond which expires in 2029. So there is nine years more and the new bonds have a maturity trajectory of twenty-five years to expire in 2038. Second key feature, Mister Speaker, there is a ten percent principal haircut off the top. So immediately, approximately Belize one hundred and eight million dollars is to be written off the current super-bond indebtedness. Third Mister Speaker, the initial interest rate coupon is for five percent lasting for four and a half years; stepping up then to six point seven-eight-eight percent for the remaining life of the new bonds. Recollect that the present interest rate under the superbond is eight point five percent. Therefore, the new initial interest rate represents a forty-one percent reduction from the current superbond interest rate. And the subsequent step interest rate represents a twenty percent reduction compared to the current eight point five percent. There is a grace period of six years before principal repayments commence, even though the bond holders in exchange for the substantial relief argued for earlier principal repayment. Government of Belize was able to hold the line and 2019 continues to be the year when principle payments begin.”

 

The restructured deal also included the capitalization of the interest that had accrued from partial coupon payments made in late 2012.

 

Dean Barrow

“This actually amounts to seventy-six point four million dollars and had we not, as part of restructuring, been able to secure the capitalization of the interest—remember we did not pay half of the last coupon payment and all that interest continued to accrue—if we had not been able to secure the capitalization of this seventy-six point four million Belize dollars in interest, we would have had to pay that sum in cash in September of 2012 and of February twentieth of 2013.”

 

The restructuring exercise was expected to cost about sixteen million dollars, but the government will now pay three million Belize dollars to close the deal.

 

Dean Barrow

“We will pay only one point five million U.S. dollars of the creditor committee expenses. Those expenses have been pegged by the creditor committee as being in the range of eight million Belize dollars and the argument was that since we were the ones triggering the restructuring, we should pay all of the creditor committee costs. We refused to do that and we were able to in fact get the committee to accept one point five million U.S. dollars. The rest of creditor committee cost will have to be borne by the bondholders themselves.”

 

Francis Fonseca

The Leader of the Opposition, Francis Fonseca, believed the government might have negotiated a better deal if the P.U.P. was involved in the negotiations.

 

Francis Fonseca, Leader of the Opposition

“Our very strong objections to and disapproval of the manner in which the government, and the Prime Minister in particular; has managed this entire debt restructuring exercise. Their approach has been secretive, it has been arrogant, it has been reckless and it has been divisive. Absolutely no information, Mister Speaker, has been shared at any point during this process with any member of the opposition. In fact, the Prime Minister publicly boasted that he would not be sharing any information with opposition.”

 

But the House Meeting temporarily cast the bond aside, and returned to the regular business of politicians provoking each other.

 

Francis Fonseca

“Get to work providing more resources to education and health; get to work.”

 

Patrick Faber

Patrick Faber, Minister of Education

“Mister Speaker on a point of order, can the member stay to the motion on hand please? He is all over the place now. Can he focus on the superbond motion Mister Speaker.”

 

Francis Fonseca

“Thank you Mister Speaker. I know the member for Collet still at this last moment, last minute, trying to win the support of his leader for his failed bid, deputy leader. But it is too late my friend from Collet, it is too late. The leader has declared his support for the member for Orange Walk North. Mister Speaker, and get to work.”

 

Patrick Faber

“While it is that I am in a race for the deputy leadership of my party that is no business for him. He is not of this party and should not meddle in that.  But since he is meddling in our affairs, let me remind him that he too was once in a race and was rejected by his party to lead and after he was rejected, they gone down the line to everybody else except him and now he dah last resort leader now.”

 

The bond went through all three readings and the PM said the deal with Greylock Capital would be re-launched either Thursday or Friday. Reporting for News Five, Jose Sanchez.

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Viewers please note: This Internet newscast is a verbatim transcript of our evening television newscast. Where speakers use Kriol, we attempt to faithfully reproduce the quotes using a standard spelling system.

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7 Responses for “Superbond restructure passes through House”

  1. beachman says:

    Watch out, Belizeans! “The Devil is in the Details” & this entire debt restructuring has taken place with little or no details shared with the ones footing the bill: the hardworking people of Belize! I pray I’m wrong but I expect things to bite Belize in the butt down the road when more details are revealed.

  2. Lucas says:

    What I do know is that the sooner a loan is paid, the less interest is paid. If I barrow $1000.00 to by a cart at 5% for a year, I will pay $50.00. If I barrow the same $1000.00 at 4% for 2 years, I end up paying $96.00 and if I barrow the same amount at 3% for 3 years I end up paying $108.00. See what I mean. So, the real cost of the cart was $1000.00 plus the interest paid. Let us not forget that as time passes, the value of the cart depreciate. The honorable P.M., because he is an honorable man, trumpets to the four corners of Belize that he got 10 years extension and that he saved us $108 millions plus another $72 millions but, he is not telling us that the interest that will be paid in those 10 years will practically wipe out the $180 millions. If any dollars is left, it’s worth will be less 10 years from now than what is worth now. What a dollar can buy you now will not buy you in 10 years. What is more, let us not forget that GOB especially this one, has sticky fingers. They will wreck as many cars as they can buy, pay millions to family members, give millions to party candidates, forgive debts to cronies etc.etc. But we must applaud our most honorable P.M for his brilliant accomplishment and congratulate, with Finnegan, our illustrous Mark Espat for carrying out the debt restructuring to a most happy ending. Meanwhile, all the rest of us Belizeans can go screw ourselves.

  3. Louisville,Ky says:

    @ Lucas…. and not a word to chastise those that got us in this mess in the first place, with little or nothing to show for a billion dollars. Such hypocrisy!

  4. Whappy says:

    There is no REAL savings in this for the people, and the creditor committee asks for $8 million? All they are doing is playing kick the can. Lucas is absolutely correct. They simply stretched out the payments, butin the end will end up paying the same thing in that 10 years in Interest. No wonder the details of this deal are sketchy….

  5. ceo says:

    The time it took Faber to have that exchange with Fonseca if Faber left him to say to say what ever he had to say he would have finished in less time. This is the crap that I always find petty with these “leaders”. Just like blody picknie!

  6. Annabelle Isaquirre says:

    What others may find amusing in this “display of honorable men” at the House each and every time there is a sitting, comes across to any intelligent Belizean as a waste of time! There are so many personal attacks and back and forth insults that makes one wonder how does Government actually get anything done….lone pappy show!! The only woman in the house is the one that makes more sense.

  7. alley cat says:

    Should the Caliente Dancers return all the money that got us into this debt?

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