General — 23 November 2016 — by Adele Ramos
Bondholders get Blitzer, ex-IMF man, to engage GOB on super bond

BELIZE CITY, Fri. Nov. 18, 2016–In a news release issued earlier this week, holders of Belize’s 2038 bonds of US$530 million announced that they had formed a creditor committee, which will act under the advice of BroadSpan Capital LLC and Blitzer Consulting (led by Charles Blitzer), both of which had also advised bondholders in the last 2012-2013 restructuring.

Blitzer, it appears, is among those who drive a hard bargain for bond holders. Currently, he advises some holders of Mozambique bonds, as that country similarly seeks to restructure its US$726 million bonds a second time.

“The bottom line is bondholders are exasperated,” said Blitzer, in response to similar attempt by Mozambique to renegotiate its super bond for a second time

“The bottom line is bondholders are exasperated,” said Charles Blitzer, who served as Assistant Director, Monetary and Capital Markets Department, at the International Monetary Fund from 2001 to 2010. Blitzer, who consults for some Mozambique bondholders, is cited in a November 7 article published by the Wall Street Journal.

In their November 16 release, holders of Belize’s 2038 bonds said that, “…the Bonds were issued as a result of a restructuring completed by [the Government of Belize] in March 2013 that has provided the country with over US$100 million in debt service relief to date.”

They say they will evaluate the statements made by the Government of Belize in regards to its present situation.

The Government of Belize has cited stunted economic growth, a major fall in earnings from prime exports such as oil and agricultural produce, as well as dwindling foreign reserves, required to meet external debt payments as well as pay for imports, as reasons for seeking an adjustment in the terms of the super bond.

This would be the third renegotiation of Belize’s bonds, which is the result of a consolidation of debts older than a decade. The Musa administration restructured the super bond 10 years ago (in 2006-2007), and the Barrow administration restructured it just 3 years ago (2012-2013).

As we had reported on November 10, the Government of Belize has re-engaged Citigroup Global Markets Inc. and Cleary Gottlieb Steen & Hamilton LLP, as it embarks on a new round of negotiations to ease payments on its debt arrangement, which spans 25 years and for which interest payments are due to mount to 6.767% in August 2017.

The Government wants to ask bondholders for an amendment to the terms and conditions of the existing arrangement, as it explores options for reducing Belize’s public debt expense through lower interest rates, reduced principal and/or an extension of the current maturity date, previously extended from 2029 to 2038.

The 2006–07 restructuring had been described as “weakly preemptive.” Some payments were missed, but only temporarily, and after the start of negotiations with creditor representatives (no unilateral default), a report of the International Monetary Fund captioned, “Sovereign Debt Restructurings in Belize: Achievements and Challenges Ahead (2014)” has noted.

Then in 2012, a partial coupon payment opened ground for extending debt exchange negotiations, the IMF report added.

“On August 21, 2012, the Government of Belize missed a US$23 million coupon payment on the ‘super-bond’ resulting in S&P’s downgrading the country to a default rating. Then, on September 20, 2012—one day after the expiration of the 30-day grace period of missed payment—the authorities made a partial coupon payment of US$11.7 million and the creditor committee agreed to give Belize 60 more days to conclude debt restructuring negotiations,” detailed the IMF report.

Last week, S&P downgraded Belize’s ratings, warning that it would likely lower the ratings if it sees a higher likelihood of the government delaying interest payments or seeking a commercial debt rescheduling, including through a potential debt exchange.

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