Belize expects big savings, debt reduction from superbond deal

THE BELIZE government says it will be able to wipe away a significant amount that the country owes external creditors by retiring all of its US dollar bonds due in 2034.

The Caribbean country is looking to restructure a US$572 million superbond that emerged from 2006-07 restructuring and now contributes to a 133 per cent debt to GDP ratio that the International Monetary Fund deems unsustainable.

Last month, Belize Prime Minister John Briceño, in a televised address, said the new agreement, supported by holders of 50 per cent of the principal amount of the bonds, calls for the bondholders to sell their claim at a very significant discount to Belize.

He said that in connection with that loan, the government will accelerate its marine conservation policies in a manner that will dramatically enhance the preservation of Belize’s precious seas, coral reefs and fish stocks.

On Tuesday, Prime Minister Briceño tabled a resolution authorising the purchase and redemption of country’s US dollar bonds under the Blue Loan Agreement, the Conservation Funding Agreement and the Ancillary Agreements Motion 2021.

“The results of our negotiation is that 45 per cent discount will wipe away US$257 million, or more than half-billion Belize dollars, that Belize owed from principal, capitalised interest and past due interest,” he said, in addition to further savings of US$58.4 million.

“Therefore, t he total debt reduction, including the principal reinstatement we dodged is a staggering US$315 million,” Briceño said.

“Those bondholders who have not tendered will have a period of two years to collect. At last report, 87 per cent of bondholders had, by tendering ... far exceeding the 75 per cent super majority our team had sought,” he added.

Belizean is refinancing the superbond through ‘blue bonds’, a special debt financing mechanism designed by the Nature Conservancy and its banker Credit Suisse.

“Belize will access some US$363 million of these bonds for the following purposes: US$301 million for the discounted repayment of the superbond, US$24 million to pre-fund a marine conservation endowment account, and US$18 million set aside as an original issue discount in order to facilitate a lower interest rate” Briceño said.