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Friday, July 10, 2020
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GOB requests a deferral on the Super Bond

If the request isn’t granted, GOB may end up defaulting on the interest payments.

BELIZE CITY, Mon. June 22, 2020– The Government of Belize is scrambling to meet its financial obligations as the country’s economy continues to contract as a result of the COVID-19 pandemic. The extent of the financial crisis is made clearly evident by the government’s request for interest capitalization on the infamous Super Bond.

Last Wednesday, the government issued a statement seeking consent of the holders of the U.S. Dollar Bonds to defer and capitalize interest due in August to 2021. If agreed upon, the interest due will be added to the principal.

The request was attributed to the ever-growing financial constraints Belize is facing during this time, which the government outlined in a press release:

“The COVID-19 pandemic has had a devastating effect on Belize’s economy. In recent years, Belize’s tourism industry accounted for approximately 60% of the country’s foreign exchange earnings; however, tourism has collapsed due to the rapid deterioration of worldwide economic conditions and the lockdown measures imposed by many countries, including Belize, to slow the spread of COVID-19. Preliminary indications are that Belize’s gross domestic product will contract by as much as 18% in 2020.”

The statement goes on to indicate that Belize’s financial authorities will be liaising with bondholders within the next two weeks to discuss the GOB’s request and the circumstances that have led to it. On Wednesday, Financial Secretary Joseph Waight spoke to News5 and explained, “the principal outstanding would go up to the extent of the payments that were due, which was about 26 million U.S. dollars, and that we pay at the end of the period when the rest of the bond becomes due.”

A formal Consent Solicitation for temporary capitalization of interest is scheduled to be launched to the bondholders in early July. The next scheduled interest payment on the Bonds is due on August 20, 2020.

If the holders do not consent, the government may end up defaulting on the interest payments, an occurrence that the FinSec says they are “hoping to avoid.”

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