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Bondholders bring in heavy hitter

Posted: Friday, November 18, 2016. 12:33 p.m. CST.
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By BBN Staff: Holders of the 2038 Bond, based on a request from the Government of Belize, have agreed to form a committee to discuss a restructuring of the bond as Belize’s economic and financial conditions have deteriorated putting the country at risk of a default.

Prime Minister Dean Barrow and Economic Ambassador Mark Espat told the media this week they were confident bondholders would form the committee before the end of November. International reports, however, suggest that bondholders have hired the services of Charles Blitzer, a sovereign debt consultant who has reputation for driving hard bargains.

Blitzer was an advisor for investors restructuring an arrangement with the government of Argentina. Reports have since noted Blitzer’s intervention on behalf of the investors and his hard-line approach to such negotiations.

The 2038s were issued in 2013 in what was then the country’s second restructuring in a matter of years. The bonds carry a step-up coupon that climbs from 5% to 6.767% in August 2017.

While creditors note that the restructuring has provided Belize with US$100m in debt service relief to date, the government said circumstances have changed since then.

“Belize’s economy has significantly underperformed in comparison with projections used at the time in setting the terms of the 2038 bonds,” the government said this month.

S&P lowered the country’s rating on Monday to CCC+ from B-, noting that fiscal and external balances have impaired Belize’s ability to meet its financial requirements.

“The sovereign’s debt servicing capacity has become more vulnerable to potentially worsening external, financial, and economic conditions, which could reduce its capacity and willingness to pay on its commercial bond,” S&P said.

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