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Jan 21, 2013

Renegotiated bond to save U.S. $247 Million

The government said today that a deal will soon be struck in re-negotiating the five hundred and fifty million dollars U.S. bond. In 2012, it appeared that a default was imminent, and then the government offered only a partial payment in September. There was a sixty day extension period which expired in November, and then in December the Prime Minister said that an agreement in principle had been reached. Those details are being discussed in meetings between the government and the co-chair of the credit coordinating committee, A.J. Mediratta who is currently in Belize. This afternoon Prime Minister Dean Barrow spoke of the restructured bond agreement but provided few details since the deal has not been sealed and is in its final stages of negotiations. The PM said that it expects that in two weeks it will be concluded and until then full disclosure of the details will be made. But the P.M. did signal that he hopes to realize about two hundred and forty seven million U.S. dollars in relief.


Prime Minister Dean Barrow

Dean Barrow

“The general economic terms of the restructuring have been agreed. There are one or two minor open issues on that score, but issues that don’t do any violence one way or another to the headline provisions of the restructuring. In addition though, there is a great deal of legal language that must be agreed between the two sides. This is language that will inform the relevant legal provisions, governing the entire indenture; that will reflect the new issue and legal provisions that will govern, as well, the fairly complex role and structure of the trustee of the exchange agent or entities such as those. I can tell you we’re so close to finality that we expect to launch the exchange offer within the next week or two. Until we can do that and, of course, when we do that there will be full and complete disclosure. Those terms will result by our calculations in a savings in cash flow relief for 2012 of U.S. eleven million dollars. Remember that there was an August coupon payment that we missed and thereafter we only made good on half of the payment.  The result of how that’s being treated in the restructured terms will mean that, in fact, we would realize the cash flow savings for 2012 of eleven million (U.S.) dollars. We are looking at cash flow savings in 2013 of thirty-three million dollars—and I am talking of U.S. dollars. We’re looking at cash flow savings during the five year period, 2013 to 2017, of U.S. one hundred and eighteen million dollars. And we’re looking at cash flow savings during the ten year period, 2013 to 2022, of U.S. two hundred and forty-seven million dollars.”

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6 Responses for “Renegotiated bond to save U.S. $247 Million”

  1. Storm says:

    It sounds as if the possible restructuring will save us 2% or so on annual interest, without a principal reduction. To me that would be a reasonable result, and not too unpalatable for the lenders. They would eventually get back their principal, just with a little lower interest, 6.5% instead of the original 8.5%. Given the state of the world economy, and record low interest rates, that seems reasonable to me.

    But as they say, a verbal agreement isn’t worth the paper it’s written on, so we had all best wait to see what is actually signed by all concerned. Then we can figure it out. The devil is always in the details.

  2. Ricky Malthus says:

    I don’t want to be pejorative but this renegotiation of terms and conditions shows the stark reality of the unadulterated incompetence and lack of economic and financial expertise this Barrow UDP government operates. So Mark Espat gets to do a retake of grand economic mistake with the agreement of our benefactors. There is nothing to celebrate as the government will simply not be paying some of the future earned interest . But it cost us Mark’s millions plus other unspecified and unrevealed service fees and commissions. It cost the taxpayers so there should not be any celebration but a wake for the poor hard working Belizeans. Barrow thinks we are all that stupid. But still there is no accounting nor accountability for the revenues from our oil wealth!!

  3. sickntired says:

    I just hope after all tax dollars we spending giving mr aj meddiratta a nice holiday in belize that ink does dry on paper giving the cash flow relief. You realise the man still give himself plenty room to come back and say he tried but the same 40% of the bonholders who never agreed to begin with still no agree. No get excited until the deal done

  4. Lucas says:

    When all the expenses, benefits, gifts etc, etc is added up, the 247 millions is practically wiped out if not all. Do not forget that the reduction is on interest only not on the loan itself. It is like the farmer who after selling his produce do not add up to his expenses. Do not forget also that the interest alone is nearly if not, equal to the loan itself. In other words, we are paying twice for what we got. So tell me; WHAT IS THERE TO REJOICE FOR? It would be a cause for rejoicing if GOB would learn to live within its means just like the house-wife does and who does not have a degree in economics.

  5. Whappy says:

    People, Wake up. No one is doing us any favors. Before the idea of a bond is even floated, there has to be some sort of prospectus provided in which provisions for repayment and the actual ability of the bond to be repaid by the person borrowing is outlined. NO ONE would buy into a bond in which there is not a chance that the borrowing entity cannot repay. Obviously we were able to show the ability to repay this thing at one time. With that said, there is a MASSIVE amount of money missing from somewhere. How are we not able to repay? We have become a product of our own laziness and entitlement mentality. The only one stopping us from moving forward is ourselves. In all reality, $500 million USD is not a lot of money for a whole COUNTRY of 350,000+ individuals to earn. We need to develop ourselves, expand our GDP, and stop waiting for something to come from somewhere and stop bawl bout ‘Haad Times’. Anyways, I guess since we will have substantial savings, then therefore that should free up additional capital for local projects such as education improvement, public servant salary increases, defense, developing new industries, etc.

  6. Bear says:

    I’m with Whappy. We can’t expect anyone to save us except ourselves.

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