Fri | Jan 19, 2018

Belize bondholders form new committee to negotiate repayment

Published:Friday | January 13, 2017 | 12:00 AM

The Bank of New York Mellon (BNY), the trustee of Belize's superbond, has officially recognised a new committee of bondholders formed to hold talks with the Dean Barrow government over the Caribbean country's third debt restructuring in a decade.

Last month, the Belize government said it expects to conclude negotiations on the restructuring of US$530 million of debt under the so-called 'Super Bond 3.0' ahead of the next interest payment due in February.

Last November, the Belize government said it wanted to begin discussions with holders of the country's bonds due 2038 as a result of the serious economic and financial challenges currently facing the country.

Belize's 2038 bonds were issued in 2013 and are the only government debt securities outstanding on the international market.

Several fund managers, including Greylock Capital Management and Grantham Mayo van Otterloo, have joined forces to form the new committee to represent bondholders, and BNY has formally approved the committee to negotiate with Belize.

In a memorandum to BNY made public this week, Belize Financial Secretary Joseph Waight said his country intends to "imminently" seek the consent of bondholders to amend the terms of the notes.

"For a variety of reasons, Belize's economy has signifi-cantly underperformed in comparison with the projections used at the time in setting the terms of the 2038 bonds," the Barrow government said in a statement last year.

The new committee said it was looking forward to an "equitable and sustainable" agreement with the government and that it wants fiscal reform alongside any potential debt relief for the country.

The Belize government has retained Citigroup Global Markets Inc as its structuring adviser and Cleary Gottlieb Steen & Hamilton LLP as its legal counsel, while the committee representing bondholders has retained BroadSpan Capital as financial adviser, Blitzer Consulting as special adviser and Arnold & Porter Kaye Scholer as legal adviser.

Last month, Prime Minister Barrow acknowledged the economic situation confronting the country, saying that's the reason his administration is pushing for some form of agreement ahead of the coupon payment due February.

"We are hoping, that is why we are pushing; we are hoping that by then we would have reached a point where we would have pretty much agreed on the restructuring, and that would then overtake that payment," said Barrow.

"In other words, if there are new terms, that payment would be subsumed within those new terms. It's not a certainty that in fact we will conclude the negotiations by then, but that is what we are aiming for, that is our objective," he said.