Superbond: Belize cannot avoid payment entirely, Prime Minister says

Published by BBN Staff at June 28, 2020

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Posted: Sunday, June 28, 2020. 1:20 pm CST.

By Aaron Humes: Ahead of negotiations for an “interest capitalization” of upcoming payments for the Superbond totalling more than BZ$50 million, Prime Minister Dean Barrow told reporters he was “fairly confident” there would be no problem with the bondholders agreeing under consent solicitation.

The Government has cited the ongoing COVID-19 crisis as the reason, but while the bondholders have said they are willing to work with the Government, this request comes barely three years after a third restructuring of the bond first established in 2011 and due entirely by 2034.

And it is for that reason, Barrow says, that “I believe that going by way [of] this fairly modest and moderate approach is the best thing to do at this time. If we simply said, can’t pay, won’t pay, there isn’t a whole lot that the bondholders can do in my view. I keep saying we don’t have assets abroad for anybody to go after.”

And a month’s grace period goes into effect after the August 20 deadline, deferring any triggering of a default clause until September.

But while Belize will make the case that the relief is not a big ask for bondholders, any suggestion of intransigent behaviour would cause wider repercussions, according to Barrow.

For a country that has been making extensive use of the generosity of other international financial institutions (IFI’s) such as the Inter-American Development Bank (IDB), Caribbean Development Bank (CDB) and so on, a default without even a semblance of trying to craft an agreement, Barrow said, “could result in a cut off of other flows because the IFIs, I think, don’t look at you particularly kind if you simply walk away from your obligations. This way, if, of course, there is not any agreement with the bondholders and we are in fact obliged to walk away, the international and, in particular, the IFIs would see that we in fact tried.”

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