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Belize hoping for major savings under new super-bond agreement

Published:Wednesday | January 23, 2013 | 12:00 AM
Dean Barrow, prime minister of Belize. - File

The Belize government says it hopes to reach an agreement soon on restructuring the country's US$544 foreign debt.

Prime Minister Dean Barrow, who last month said that an agreement had been reached with the creditors, but gave few details on the accord, said he anticipates that the country is looking at cash flow savings over a decade of US$247 million under the terms of the new accord.

Barrow who has been meeting with the co-chair of the credit coordinating committee, A.J. Mediratta, told a news conference late Monday that he expects the discussions would be concluded within the next two weeks.

"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," he said.

Barrow said that there is also a great deal of legal language that must be agreed upon 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 govern, as well, the fairly complex role and structure of the trustee of the exchange agent or entities such as those," he told reporters.

"I can tell you we are 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."

Still, he said, Belize expects to save US$11 million in cash flow relief for 2012 and US$35 million for 2013.

Over the medium to long term: "We are looking at cash flow savings during the five-year period 2013-17 of US$118 million and we are looking at cash flow savings during the 10-year period of US$247 million," the prime minister added.


Last month, bondholders rejected an offer from the small Central American country on the restructuring of the super-bond and said they were consulting with their lawyers on legal action.

Belize, which said it could not afford to meet rising interest payments on the bond, shocked bondholders with an earlier suggestion that they take a haircut of up to 45 per cent.

Mediratta, a senior partner of Greylock Capital Management, said while the negotiations had not started out smoothly, now says an agreement is in sight.

"A broad agreement on the general terms was reached in late December. Right now, really, we are just grinding through the process. It takes time to go from agreement to the lawyer's drafting the specific language," Mediratta said.

"It's a big document and it has to be precise ... and it takes several weeks to play out, but we do think that we are one or two weeks away from wrapping up the final recommendations," he said.