The deal isn’t done, but “it’s close to finality” —  within a couple weeks

Prime Minister Dean Barrow held a press conference today, Monday, January 21, to provide an update on the current status of the Superbond. The PM said that he was still unable to give details on the economic terms of the Superbond until another week or two, but he did address the current estimates in cash flow savings that are anticipated.

“The Superbond restructuring negotiating team has reached a support agreement with the committee representing the Superbond holders… we continue to try to work through the outstanding issue and to bring finality to the process,” Barrow stated.

The PM said that the general economic terms of the restructuring have been agreed. There are one or two minor issues that stand, but those issues “don’t do any violence one way or the other” to the restructuring, he explained.

“While I can’t say to you this afternoon that the deal is done, I can tell you that we’re so close to finality that we expect to launch the exchange offer within the next week or two,” he said. “Until we can do that and of course when we do that there will be full and complete disclosure but until we do that — because of the sensitivity of market trading, because we have to be careful that we don’t run afoul of SEC regulations, because we don’t want to give anybody an unfair lever with respect to the trading in the bond — I still cannot give you the full particulars of the economic terms I have said to you we have agreed,” Barrow went on to say.

The PM said that those terms will result, by the government’s calculations, in a savings in cash flow for 2012 of US$11 million. He said that the government is looking at a cash flow savings of US$23 million for 2013, US$118 million for the five-year period of 2013-2017, and US$247 million for the ten-year period of 2013-2022. In explaining his present refusal to grant teachers a pay raise despite the major fiscal relief that the Superbond will provide, the PM said that the salary demands of teachers and public workers would affect the fiscal gap, whereas the cash flow savings from the imminent settlement with the bondholders will be helpful but will not bring fresh money.

“These savings of cash flow relief that we will accumulate will not eliminate Belize’s fiscal gap,” he said. “It will not completely eliminate our financing gap but it will make that gap in our view, entirely manageable. It will mean that our efforts going forward will be sustained,” he said. But, Barrow argued, granting a pay raise to teachers would “immediately add back on to the deficit…. the two hundred and odd million dollars over three years that the salary demands would represent.”

Before the launch of the final agreement takes place, the members of the credit team will reengage with the social partners to review the key differences between the terms of the current Superbond and those secured as part of the debt exchange.

Another purpose of the conference was to introduce A.J. Mediratta who is the chairman of the creditor committee and representative of the bondholders. Mediratta said that he too was unable to speak on the particulars of the Superbond but will do so when the launch occurs. He said that the committee has not made a formal statement since December 2012. The committee is currently going through the process of completing the final agreement.