GOB makes new bond proposal, default looms

Posted: Sunday, March 5, 2017. 10:35 a.m. CST.

By BBN Staff: The government of Belize has revised it Consent Solicitation to holders of the 2038 Bonds in hopes of bringing restructuring efforts to a close before the end of the 30-day grace period with just two weeks to go after missing its US $26.6 Million coupon payment, which was due on February 20.

Belize has been scrambling to finalize restructuring efforts and avoid defaulting on the bond. GOB’s original Consent Solicitation, issued on January 12, had proposed that bondholders reduce interest rates from 5 to 4 percent and that amortization payments be pushed back way until 2036 when GOB proposes it will start making three annual payments upwards of $100 Million each.

Bondholders, however, were unhappy with the proposed terms and held out, prompting GOB to make a revision to its proposal, which it finally did on Friday. According to GOB’s new proposed terms, the interest rate would be set at 4.9375% through to the bond’s final maturity. GOB is also proposing that the final maturity date of the bond be advanced from 2038 to 2034 and that amortization payments be amended to five equal payments starting on February 20, 2030 and ending on February 20, 2034.

Belize’s revised offer also proposes that if Belize doesn’t achieve a 2% primary surplus in each of the next three fiscal years, that interest payments on the bonds for the subsequent 12 months will be payable quarterly rather than semi-annually. It also proposes that is Belize fails to meet its 2% GDP surplus that the country will seek the assistance of the International Monetary Fund (IMF) for an assessment and recommendations.

There has been no indication that bondholders have made a decision on whether or not to accept Belize’s latest proposal, however, reports suggest that bondholders may be more receptive to GOB’s latest proposal than its previous.

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