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Belize creditors organize as government requests Superbond deferral

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Posted: Friday, June 19, 2020. 2:26 pm CST.

By Aaron Humes: According to Reuters, Belize’s bondholders led by Grantham, Mayo, van Otterloo & Co. LLC and Greylock Capital Management, LLC have formed a creditor committee to work with the country ahead of a planned consent solicitation for them to agree with deferred payment of interest on U.S. dollar bonds due in 2034.

In a statement the group said, “The committee looks forward to engaging with the government to exchange views on the economic pressures that may constrain Belize’s capacity to service full coupon payments in the near term.”

The Government of Belize on Wednesday announced that it would ask the bondholders to defer interest payments valued at BZ$52 million, as it grapples with the economic impact of the COVID-19 crisis. The formal request is to be made in early July, with the next payment officially due on August 20.

Tourism, which typically makes up over half of Belize’s foreign exchange earnings, has particularly suffered since the start of the pandemic. Belize’s gross domestic product is forecast to contract by up to 18% this year, according to the government.

“The COVID-19 pandemic is having a devastating effect on Belize’s economy… Tourism has collapsed due to the rapid deterioration of worldwide economic conditions and the lockdown measures imposed by many countries,” a government statement said.

Reuters says the 2034 bond had just over US$526 million outstanding, according to Refinitiv data, and was last trading at just over 40 U.S. cents on the dollar.

The bondholders noted the bonds were already subject to a restructuring completed by Belize in March 2017 and a prior restructuring completed in March 2013.

“Both transactions have provided the country with over U.S. $200 million in debt service relief to date,” the bondholders’ statement said.

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