Tue | Sep 19, 2017

Bondholders endorse Belize's revised debt structuring plan

Published:Friday | March 10, 2017 | 3:00 AM
Dean Barrow, Prime Minister of Belize.

A committee representing the majority of bondholders has endorsed a revised proposal from Belize that reduces the interest rate on its superbond and shortens its maturity.

In January, the BNY Mellon, the trustee of the bond, gave the green light to the new committee, represented by Greylock Capital Management and Grantham Mayo van Otterloo, to negotiate with the Belize government.

Charles Blitzer, the adviser to the committee, speaking on Belize News 5 Television news broadcast on Tuesday night, said that the group supports the new position "because the government is making commitments to adjust its fiscal stance, to reduce fiscal risk going forward, to improve debt sustainability. And compared with the original proposal in January, the terms are somewhat better".

The global bond was issued in 2013.

The Dean Barrow government recently announced a revision of its position regarding the restructuring of the so-called 'Super Bond 3.0' that was originally due by 2038.

The original amortisation structure spanned 38 semi-annual instalments ending February 20, 2038.

Now, the proposal is for the outstanding principal to be paid off in five equal, annual instalments commencing February 20, 2030, and ending on February 20, 2034, the Belize government said in a statement last week.

The current structure currently pays interest at five per cent per annum, which was scheduled to step up to 6.767 per cent in August of this year. But now, interest will be fixed through final maturity at 4.9375 per cent under the restructured bond.

Bondholders have until today, March 10, to sign a Consent Solicitation agreeing to the new structure.

"The government's responsibility is to negotiate in good faith with the committee, and that's exactly what occurred. And I think the final agreement represents a positive step forward," Blitzer said.