Latest grace period for Superbond to expire two days before Independence Day

Posted: Wednesday, June 16, 2021. 4:40 pm CST.

By Aaron Humes: On Monday, the Government of Belize announced that holders of its 2034 bonds have agreed to extend the grace period of a coupon payment missed last month to September 19, two days before Belize’s Independence Day, Reuters reports.

Belize’s $550 million bond was unchanged in price on Monday but closed up 5 cents last week for its strongest weekly showing in 14 months. The consent solicitation deadline expired last week Friday.

The proposal had been endorsed by a group of creditors, including U.S.-based GMO and Greylock as well as London-based Abrdn, which previously rejected Belize’s consent solitication attempts, prompting Prime Minister and Minister of Finance John Briceno to say they were “shooting themselves in the head” by playing hardball tactics in a television interview.

The bond traded as low as US 32.5 cents on the dollar in the second half of April, and last traded at 40.25 cents. The price matches its May high and is the highest since early April.

Earlier this month, the International Monetary Fund (IMF) said Belize’s recovery is subject to large risks and challenges, including “unsustainable public debt, widening external imbalances, and vulnerability to natural disasters and climate change.”

The IMF projects gross domestic product will grow 1.5 percent this year and 6.2 percent in 2022, but warned Belize would not return to pre-pandemic levels of economic growth until 2024 or 2025. It called for broadening the tax base and creating contingency plans but otherwise endorsed Belize’s home-grown economic plan, averting the prospect of a standby arrangement as demanded by the bondholders, which the Government suggested would include retrenchment of public officers, severe expenditure cuts and higher taxes, and at the outside devaluation.

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