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Home Headline PM: Superbond end in sight, but not guaranteed

PM: Superbond end in sight, but not guaranteed

BELIZE CITY, Wed. Sept. 8, 2021– Yesterday, Prime Minister Hon. John Briceño released a video message informing the country that later this week an offer will be made to bondholders for the buyback and cancellation of the US $572 million “superbond” at a discounted price tag.

Since 2007, the country has been saddled with that enormous debt, but an agreement with The Nature Conservancy and its affiliates could lead to the utilization of Blue Bonds (which hinge on a commitment by GOB to marine conservation) to wipe out the debt, which exceeds a billion BZ dollars.

While the announcement of the proposed buyback has spawned hope and jubilation among many members of the public, Prime Minister Briceño cautioned that there is no guarantee that the proposal will be successful, since 75% of bondholders must first agree to the purchase of the bonds they currently hold — at significantly reduced rates (a 48.3% discount to the face value of the Superbond).

During his remarks, the Prime Minister said, “This agreement calls for the bondholders to sell their claim at a very significant discount to Belize. Specifically, this deal calls for a 48.3% discount to the face value of the Superbond, together with, to those holders that tender the offer period, payment in lieu of accrued interest on the bonds. The government intends to raise [funds] for the discounted repurchase through a loan from an affiliate of The Nature Conservancy. In connection with the loan, 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.”

He then made a cautionary statement, however: “But let me be clear — in principle, the agreement government has hammered out with the bondholder committee does not guarantee that our proposal will ultimately succeed,” he said.

The committee that made the agreement in principle with Belize’s negotiating team represents just 50% of bondholders. However, as previously mentioned, the agreement of 75% of bondholders is required in order to close and eliminate the Superbond in its entirety.

“I emphasize, that while we have completed a critical first phase of this process, ultimate success requires additional bondholder support as well as an agreement on certain conditions attendant to the TNC financing and the conservation objectives.” PM Briceno said.

Hon. Briceño then noted that if the Superbond buyback is indeed successful, the country will, as part of its agreement with the TNC, be embarking on a total investment of almost 172 million dollars in marine conservation over the next 20 years and, as previously announced, will set up a Marine Conservation Endowment account of 47 million dollars which will be funded by the government and is expected to grow to 184 million dollars in investment earnings within the next 20 years.

“Under the existing terms of the Superbond, Belize would have been required to pay some $245 million in interest alone during the five-year term of our administration. With our proposal, Government will pay 115 million Belize dollars in interest, thus generating a cash flow saving of some 130 million Belize dollars. Despite having been restructured three separate times over the last 14 years on its current terms, the Superbond calls for payment aggregating more than 1.8 billion Belize dollars over its remaining life.” said the Prime Minister.

He added, “Even after netting out the anticipated cost of the funding required for this operation, we expect that canceling the Superbond will save for the Belizean taxpayer more than 530 million Belize dollars in gross debt repayments.”

Yesterday, the Belize Business Bureau issued a press release indicating its support of the proposed buyback of the Superbond through TNC financing. “The Belize Business Bureau supports the government’s current efforts to restructure the Super Bond. BBB applauds the innovative effort of propelling the blue economy forward. While the negotiations are in flux and depends on 75% acceptance, the BBB is confident that this initiative will yield success since the deadline is November 19 for concurrence and consummation to occur. If successful, this savings translates into a 15.6% reduction from the 130% national debt. This will also improve currency stability,” the release said.

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