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Tuesday, June 22, 2021
Home Headline Superbond restructuring hits roadblock

Superbond restructuring hits roadblock

BELIZE CITY, Wed. May 5, 2021– The Government of Belize’s scheduled “Superbond” restructuring is at a standstill at this time as bondholders demand that the country agrees to an IMF program before resuming dialogue.

Belize is attempting its fifth debt restructuring in 15 years. During the 2021/2022 budget debate, Prime Minister John Briceño stated, “Negotiations to restructure the Superbond have commenced. In good faith, Belize invited the formation of a Creditor Committee on 19th March and proposed new terms for this obligation, which at US$556.5 million, represents 28 percent of outstanding overall debt and 40 percent of external debt. More importantly, the current interest payments, set at a coupon rate of 4.9375 percent, or $55 million annually, constitute 45 cents of every dollar budgeted for debt service in the Approved Budget for FY 2020/2021.”

This Creditor Committee, formed by the superbond holders, GMO and Greylock of the United States and London-based Aberdeen Standard Investments (ABRDN), is now signaling that a restructuring may not occur unless the country seeks to put in place measures recommended by the IMF in order to secure its financial assistance.
The Government of Belize, inclusive of the Opposition, has gone on the record to reject the IMF’s proposed support plan, which could very likely include retrenchment of public workers and a GST rate as high as 19%.

The committee maintains, however, that Belize’s economic policy would be “more durably addressed in the context of an IMF-supported program.”

A release issued by the Government of Belize outlined, “A meeting with the committee to discuss issues related to the proposed restructuring of the Bonds with Minister Coye had been scheduled for May 3, 2021. That meeting was canceled after the committee would not agree to Belize’s proposed extension of the customary confidentiality arrangement that has been in place, and the committee’s representatives indicated that the meeting was unlikely to be worthwhile unless Belize agreed in advance to accept a full IMF program [a step that the Belize authorities had previously said they were not planning to take].”

So now, the Superbond restructuring talks seem to be at a pause until either party relents.
The release issued by the Ministry of Finance also outlined that the country has been in consultations with IMF staff for months and with their help have developed a fiscal adjustment program that is broadly in line with the Fund’s recommendations. What is being demanded by the bondholders’ Creditor Committee, however, is Belize’s acceptance of a full IMF support program.

The committee is also asking the country to carry out a rebasing exercise, which would recalibrate government statistics that include key economic indicators. The GoB release stated that the exercise has been in the pipeline for some time, but was stalled by the COVID-19 pandemic.

The bondholder’s Creditor Committee also asked the country to consider contesting the validity of Belize’s Petro Caribe debt to Venezuela. The country flatly rejected the suggestion, stating, “Belize, as a responsible nation, has no intention of taking such an action.”

Bondholders are now invited to submit comments and recommendations concerning the restructuring of the bond to the Financial Secretary, Joseph Waight.

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