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Sunday, 18 November 2018

Belize misses payment on 2038 bond: financial secretary

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Belize has missed an interest payment on its only international bond, the Central American country’s financial secretary, Joseph Waight, told IFR on Tuesday.

The missed coupon on the country’s US$530m 2038 bond, which was due on February 20, could put Belize in default if the government fails to pay before the end of the 30-day grace period, according to the bond’s terms.

Belize and its creditors have been engaged in discussions to amend the terms of the bond – the country’s third restructuring in a decade – since late last year, but a deal has so far been elusive.

Local authorities had aimed for a restructuring to take place before a US$13.2m coupon payment due on February 20 and launched a consent solicitation in January to amend the bond’s amortisation schedule and lower its coupon.

A bondholder group appointed by the majority of holders, however, quickly rebuffed that offer arguing that it would reduce the net present value of the bond by over 40%. 

A last-ditch effort by the government to get creditors on board by extending the offer’s deadline to February 24 appears to have fallen into a void, though the two sides have been working behind the scenes to hammer out a deal.

“Face-to-face meetings are taking place and we are narrowing some of the differences,” a source familiar with the situation told IFR on Tuesday.

The creditors have asked the government to seek assistance in developing an economic program endorsed by multi-lateral lenders such as the International Monetary Fund.

The bondholder committee was formed at the end of last year by Greylock Capital Management, Grantham Mayo van Otterloo, Steadfast Insurance Company and Capital Markets Financial Services.

Belize has retained Citigroup as a structuring adviser and law firm Cleary Gottlieb Steen & Hamilton as legal counsel. Creditors have hired BroadSpan Capital as financial adviser and Blitzer Consulting as special adviser.

 

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