Now, the Government of Belize (GOB) is trying to secure a US$65.4 million loan from foreign investors, and the aforementioned memorandum was intended to be distributed only to prospective investors, so that GOB could decide whether to proceed with the bond.

The 103-page bond offering document (which is available on the freebelize.org website) revealed (in Section 7.8) that scheduled principal repayments, between 2005 and 2008, for GOB?s existing foreign debt, total BZ$388 million, while interest payments on those loans in that same period would amount to about BZ$360 million. Total foreign debt servicing (interest plus principal) during the 4-year period (05-08) amounts to BZ$750 million, or an average of BZ$188 million annually.

The burden increases in the subsequent 5-year period (2009 to 2013), with the total foreign debt servicing amounts to BZ$1.2 billion, according to the document.

In 2004, the Government ?re-profiled? almost BZ$300 million in foreign debt to ease its burden: ?During 2004,? the document said, ?the Government completed the re-profiling of certain public sector external debts, namely US$65 million with the Royal Bank of Trinidad and Tobago (RBTT) for mortgage-backed debt obligations of DFC [Development Finance Corporation] and US$78 million with the International Bank of Miami (IBOM) for certain bridge financings of the Government. The RBTT re-profiling extended the maturity of the DFC debt by approximately 6 years, while the IBOM re-profiling repaid the IBOM bridge financings through the issuance of new notes [?borrowing from Peter to pay back Peter?] which carry a new maturity of seven years.?

When he presented his budget speech on January 14, the Prime Minister and Minister of Finance, Hon. Said Musa, reported the country?s disbursed outstanding external debt as at the end of November, 2004, at US$968.8 million, or BZ$1.9 billion, which, he said, was 81% of the country?s gross domestic product.

It would take Belize longer than 2013 to clear its current debt bill, however. The bond document mentioned earlier recalled that Belize had tapped the public capital markets twice in the last few years: the first was for the issuance of US$125 million in 2002, due in 2012; the second was for US$100 million in 12-year loan notes, due in 2015.

Last year, Belize attempted to float a US$225 million [BZ$450 million] bond, but the offering never materialized. Then in October, 2004, Belize received a proposal from Bear Stearns and Artemis Global Finance for a US$125 million sovereign bond; however, that bond offering has been significantly trimmed to US$65.4 million.

The current bond, which the Prime Minister said would be tabled before legislators?most of them aligned with his political party?would be backed by default insurance, to be covered by Steadfast Insurance Company?s subsidiary, Zurich American Insurance.

Under the terms of the offering, Belize would get only US$43 million out of the US$65 million. The remaining US$22 million would go towards prepaying US$13.5 million insurance costs and US$8.52 million to the issuer as ?mandatory prepayment? of the loan.

Interestingly, the Government of Belize is again embarking on this transaction through a ?special purpose? vehicle, like DFC?s subsidiary – the Belize Mortgage Company, used in the mortgage-securitization program undertaken by the DFC and the Social Security Board in 2000/2001.

According to the private placement memorandum for the current bond, ?The Government intends to raise approximately US$65 million through the private placement of a loan?to be lent by a special purpose company, Belize Sovereign Investments I (Cayman) Limited (BSIICL or ?the Issuer?)?a special purpose company incorporated with limited liability in the Cayman Islands. The shares of the Issuer will be owned by a charitable trust or foundation.?

GOB would own one participating non-voting share in the ?special purpose company?; the document did not say who would own the rest. Under the arrangement, the special purpose company would actually be the lender to GOB, as well as the issuer of the sovereign US$65 million bond.