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#457963 - 02/13/13 01:55 PM Prime Minister: New Debt Terms on Defaulted Bond
Marty Offline
Belize’s government proposed extending maturities and cutting the coupon on the country’s $544 million of defaulted debt as part of the Central American nation’s second debt restructuring since 2007.
Prime Minister Dean Barrow’s plan would extend the maturity on the defaulted bonds to 2038 from 2029 and lower the current coupon to 5 percent from 8.5 percent. Barrow, speaking to the lower house in Belmopan, said the agreement would provide the country $247 million in relief over the next 10 years.

“There is no reason to fear that with this massive package of debt relief, there can be any chance of Belize defaulting again,” Barrow said.

Belize missed a $23 million coupon payment on its bonds in August. It later paid half the amount as talks with creditors continued.

The House of Representatives will vote on the terms of the agreement today, followed by a Senate vote tomorrow, Barrow said.

The price on Belize’s 2029 debt fell 2.4 cents to 57.14 cents on the dollar at 1:19 p.m. New York time.

Bloomberg News

===================

discussion....

From scalping to trimming:
superbond 2.0 a new bond, as of 31 March, to the value of USD530. This will reportedly be
repaid at an interest rate of 5% from March 2013 to August 2017 and then 6.767% from August 2017 to February 2038 with payments due every six months .

Going from USD550 million to USD530 million is not a haircut it's a trim.

Response....

But going from 12% to 5% is bloody well a haircut in present value calculations!!! Although the divorce judge, like you, couldn't wrap his brain around that concept!!!

Response to above...

I was talking in terms of principal reduction . Over six months ago i said it was unlikely that we would get a significant principal reduction given that if the bond was less than USD500 It would be ineligible for any index. In terms of savings Prime Minister Dean Barrow has previously suggested that the government is looking at cash flow savings of USD33 million in 2013, USD118 million during the period 2013 to 2017, and USD247 million during the 10-year period of 2013 to 2022.

A principal reduction "haircut" of USD250 would have been interesting bc then we could have included a settlement with BEL and just MAYBE New State who advised BTL would settle and we would prob have a new superbond around USD600 and no major judgements

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#457964 - 02/13/13 02:08 PM Re: Prime Minister: New Debt Terms on Defaulted Bond [Re: Marty]
Marty Offline

Almost Out Of Superbond-age: Belize Gets Ready To Launch Bond Offering

The Superbond 2.0 is days away from launching and - if everything goes as planned - weeks away from being finalized. The final terms were announced today at the House of Representatives where the only business was the Government of Belize External Debt Restructuring Motion.

In presenting the bill, The Prime Minister - as Minister of Finance outlined the terms of the offer for the new bonds valued at over a billion Belize dollars and maturing over 25 years.

Prime Minister Dean Barrow
"A 25 year maturity ending in 2038. This is 9 years more than the current maturity under the super bond which expires in 2029, so there is 9 years more and the new bonds have a maturity trajectory of 25 years to expire in 2038. Second key feature Mr. Speaker, there is a 10% principal haircut off the top, so immediately approximately BZ$108 million dollars is to written off the current super bond indebtedness."

"Third, Mr. Speaker. The initial interest rate coupon is for 5% lasting for 4.5 years stepping up then to 6.788% for the remaining life of the new bonds. Recollect that the present interest rate under the super bond is 8.5%. Now Mr. Speaker the estimate of debt service reductions resulting from the new terms negotiated by GOB are as follows: BZ$22 million dollars in 2012; BZ$66 million dollars in 2013; BZ$236 million dollars during the 5 year period 2013-2017 and BZ$494 million dollars during the 10 year period 2013-2022. The deal we have negotiated see us come out finally at a net present value 56.75 cents on each super bond dollar or a reduction in net present value terms of over 43%."

"Even at the price of losing the partial IDB guarantee that we sought this government resisted the proposal/preposition of an IMF program notwithstanding the pressures brought to bear on us by the US Treasury by the IMF itself and by the other IFIs. This would have surrendered Belize's fiscal and monetary independence and would have meant higher taxes and public service coffers."

Hon. Francis Fonseca
"Their approach has been secretive. It has been arrogant. It has been reckless and it has been divisive. Absolutely no information Mr. Speaker has been shared at any point during this process with any member of the Opposition. In fact the Prime Minister publicly boasted that he would not be sharing any information with the Opposition. He publicly declare his intention and offered an undertaking to support this intention at his press conference to have the renegotiating team appeared before the finance and economic development committee of the House of Representatives to brief that committee on the progress of the restructuring exercise. But like so many of the promises and commitments made by this Prime Minister over the past five years this turn out to be just empty press conference rhetoric. He never intended to keep that commitment and he has not kept that commitment. We meet this morning to authorize the issuance of new bonds valued at over 1 billion dollars and the Opposition is sent the bare text of the motion at 5pm yesterday. A deliberate decision by this Prime Minister to withhold information from the Opposition members of this house. You see Mr. Speaker the Prime Minister is yet to learn that when he disrespects us on this side of the house he is disrespecting half the country of Belize and any leader even one as arrogant as he is who disrespects half the country and half the people in this country is doomed to absolute failure. The one thing every Belizean can be sure of today is that all the wining and moaning of the last 5 years about the super bond is over. No more crying Mr. Prime Minister. No more excuses."

Hon. Julius Espat
"What the Belizean people is concern about now that the restructuring is done, the blaming is over. The super bond boogeyman is done. The Belizean people want to know how is it that the United Democratic Party will grow this economy?"

Hon. Michael Finnegan
"They are of the impression or saying to the Belizean public that the super bond blame game is over. That is not true sir. The super bond blame game is not over. It will be concluded at 2038. How can they holler Mr. Speaker that the super bond blame game is over. Well I could tell you that if you all think that the super bond blame game is over you will hear it until you all are dead."

Hon. Oscar Requena
"I believe that it is a total disrespect when us as elected members cannot see the motion/papers that we are to come and debate in this honorable house and Mr. Speaker we owe it to the Belizean people and I also want to say that it is only fitting that these procedures be followed if you are going to be talking about strengthening our democracy in our country."

Prime Minister Dean Barrow
"Up to yesterday afternoon the terms were still being finalized with the lawyers in New York. They seem to think that we just snap our fingers and produce this agreement. If you don't understand there is nothing wrong with ignorance but don't try to turn your ignorance into a virtue. Simply say that there are gaps in your knowledge that you would like filled. This was an extremely high powered but delicate operation and that is the basis for the lack of more adequate from their point of view notice in terms of bringing the motion to the house today. I listen to the Leader of the Opposition saying that I disrespected half of the country. I don't agree but what is beyond doubt is that the People's United Party disrespected the entire country when it saddled us with the super bond. When you want to make noise about transparency and respect remember that none of those individual loans that were eventually lumped into the super bond - none of these huge onerous "shile up" light loans - none of them was brought to the National Assembly. You want to talk about transparency and lack of respect, in other words we did not know when you were contracting this international Bank of Miami, Mr. Speaker afterwards when we start hearing the names - names nobody in this country was even familiar with. I remember the song about the man who was complaining when the lady left him, he said the he bought he things that he couldn't even pronounced; Gucci. This super bond that we are now managing to tame, this super bond that we are restructuring consisted entirely of People's United Party government external commercial indebtedness."

"Where was the transparency when you contracted that UHS debt? When the ex-Prime Minister signed the guarantee that nobody knew about witness by the then attorney general the current Leader of the Opposition - where was the transparency then? Where was the respect?"

"Throughout I try to keep the nation apprise by way of the press conferences. We made clear that there were details that had not yet been finalized that we could not share. In general terms the people of this country have been following along this magnificent work in progress and they have no complaints to make about any lack of consultation. I will plead guilty to the fact that we did not specifically consult with the People's United Party. I will plead guilty, I will gladly plead guilty, I will proudly plead guilty to the fact that we did not kept them abreast because as the Honorable of Education has said if we had done so it would have meant that we would have been sharing critical details with quite frankly in terms of this process the enemy or at least the consort or the hand maiden of the enemy - that would have been a grotesque and I for one am not in that."

And to go over it in brief, some of the key features are: a 10% discount or haircut, maturing in 25 years time, which will bring it to the year 2038 rather than 2029 which was the maturity date for the original Superbond. For the first five years, the coupon rate is 5% and then it steps up to 6.78% for the remaining period.

Notably, the interest owed to bondholders up to September 2013 won't be paid, it will be capitalized?- a savings for Belize of 76 million dollars. Also on the upside for Belize: no consent fees are being paid to bondholders, and there are no value-added incentives given to bondholders:?such as oil certificates or GDP warrants. If those had been given, bondholders would have gotten a cut of future oil revenues, or a slice of the GDP if it grew beyond a certain level, as a compensation for their losses. But, no warrants means that they won't get any added portion of future growth in oil or GDP.

All told - as the PM pointed out, the net present value losses to bondholders are approximately 43.25% - which means the same amount in savings for Belize.

It's a good deal for Belize, but not yet not a done deal. It will be launched on Friday and to make it work, 75% of the bondholders would have to buy in - that's what triggers what's called a collective action clause - which then forces the holdouts to accept the new bond offering. We mention that caveat because according to the Prime Minister there are forces hard at work trying to undermine the bond offering. He explained...

Prime Minister Dean Barrow
"There was what a friend of mine refers to as the "the game behind the curtain" being played by the Ashcroft Alliance. Designed of course to wreck any agreement between Belize and Its bond holders. People in this country have seen the efforts mounted by the so-called Belize Debt Watch. They have seen the campaign of mis-information. Belize Debt Watch - the ads are prepared by Godfrey Smith a known agent of Michael Ashcroft voiced to some extent by Ashton Longsworth Belize Bond Group advocating directly to bond holders that no interest rate reduction should be given to Belize. Belize Bond Group - we have not been able to find out - they are operating anonomously - we Belize again that its part of the Ashcroft Alliance. The Ashcroft Alliance has denied it but certainly in terms Belize Debt Watch being handled local players that are just name - tied to the Opposition they endorsed this super super bond or debt slavery plan for Belizeans. Mr. Speaker if we were have to pay out immediately US$135.3 million dollars, if we were to saddled ourselves with a $1.033 billion dollars super super bond so that according to the Ashcroft Alliance we could pay their claims with respect to the nationalization in full I suspect that we would deserve a fate that would see the people of this country march every single one of us outside into the public square and hang us from the nearest tree."

7news has seen the email being circulated by the so-called "Belize Bond Group." It warns bondholders that government will give teachers and public officers a 10% pay raise for 2014 through 2017, quote "at the expense of bondholders'." It recommends? that all bondholders quote, "refrain from accepting this bond exchange." So with that kind of holdout campaign being pushed from some quarters, the three weeks ahead will be the true test - but Government sources say that if the bondholders don't accept this deal, they might not be seeing another any time soon.

Channel 7


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#457965 - 02/13/13 02:08 PM Re: Prime Minister: New Debt Terms on Defaulted Bond [Re: Marty]
Marty Offline

Almost Out Of Superbond-age: Belize Gets Ready To Launch Bond Offering

The Superbond 2.0 is days away from launching and - if everything goes as planned - weeks away from being finalized. The final terms were announced today at the House of Representatives where the only business was the Government of Belize External Debt Restructuring Motion.

In presenting the bill, The Prime Minister - as Minister of Finance outlined the terms of the offer for the new bonds valued at over a billion Belize dollars and maturing over 25 years.

Prime Minister Dean Barrow
"A 25 year maturity ending in 2038. This is 9 years more than the current maturity under the super bond which expires in 2029, so there is 9 years more and the new bonds have a maturity trajectory of 25 years to expire in 2038. Second key feature Mr. Speaker, there is a 10% principal haircut off the top, so immediately approximately BZ$108 million dollars is to written off the current super bond indebtedness."

"Third, Mr. Speaker. The initial interest rate coupon is for 5% lasting for 4.5 years stepping up then to 6.788% for the remaining life of the new bonds. Recollect that the present interest rate under the super bond is 8.5%. Now Mr. Speaker the estimate of debt service reductions resulting from the new terms negotiated by GOB are as follows: BZ$22 million dollars in 2012; BZ$66 million dollars in 2013; BZ$236 million dollars during the 5 year period 2013-2017 and BZ$494 million dollars during the 10 year period 2013-2022. The deal we have negotiated see us come out finally at a net present value 56.75 cents on each super bond dollar or a reduction in net present value terms of over 43%."

"Even at the price of losing the partial IDB guarantee that we sought this government resisted the proposal/preposition of an IMF program notwithstanding the pressures brought to bear on us by the US Treasury by the IMF itself and by the other IFIs. This would have surrendered Belize's fiscal and monetary independence and would have meant higher taxes and public service coffers."

Hon. Francis Fonseca
"Their approach has been secretive. It has been arrogant. It has been reckless and it has been divisive. Absolutely no information Mr. Speaker has been shared at any point during this process with any member of the Opposition. In fact the Prime Minister publicly boasted that he would not be sharing any information with the Opposition. He publicly declare his intention and offered an undertaking to support this intention at his press conference to have the renegotiating team appeared before the finance and economic development committee of the House of Representatives to brief that committee on the progress of the restructuring exercise. But like so many of the promises and commitments made by this Prime Minister over the past five years this turn out to be just empty press conference rhetoric. He never intended to keep that commitment and he has not kept that commitment. We meet this morning to authorize the issuance of new bonds valued at over 1 billion dollars and the Opposition is sent the bare text of the motion at 5pm yesterday. A deliberate decision by this Prime Minister to withhold information from the Opposition members of this house. You see Mr. Speaker the Prime Minister is yet to learn that when he disrespects us on this side of the house he is disrespecting half the country of Belize and any leader even one as arrogant as he is who disrespects half the country and half the people in this country is doomed to absolute failure. The one thing every Belizean can be sure of today is that all the wining and moaning of the last 5 years about the super bond is over. No more crying Mr. Prime Minister. No more excuses."

Hon. Julius Espat
"What the Belizean people is concern about now that the restructuring is done, the blaming is over. The super bond boogeyman is done. The Belizean people want to know how is it that the United Democratic Party will grow this economy?"

Hon. Michael Finnegan
"They are of the impression or saying to the Belizean public that the super bond blame game is over. That is not true sir. The super bond blame game is not over. It will be concluded at 2038. How can they holler Mr. Speaker that the super bond blame game is over. Well I could tell you that if you all think that the super bond blame game is over you will hear it until you all are dead."

Hon. Oscar Requena
"I believe that it is a total disrespect when us as elected members cannot see the motion/papers that we are to come and debate in this honorable house and Mr. Speaker we owe it to the Belizean people and I also want to say that it is only fitting that these procedures be followed if you are going to be talking about strengthening our democracy in our country."

Prime Minister Dean Barrow
"Up to yesterday afternoon the terms were still being finalized with the lawyers in New York. They seem to think that we just snap our fingers and produce this agreement. If you don't understand there is nothing wrong with ignorance but don't try to turn your ignorance into a virtue. Simply say that there are gaps in your knowledge that you would like filled. This was an extremely high powered but delicate operation and that is the basis for the lack of more adequate from their point of view notice in terms of bringing the motion to the house today. I listen to the Leader of the Opposition saying that I disrespected half of the country. I don't agree but what is beyond doubt is that the People's United Party disrespected the entire country when it saddled us with the super bond. When you want to make noise about transparency and respect remember that none of those individual loans that were eventually lumped into the super bond - none of these huge onerous "shile up" light loans - none of them was brought to the National Assembly. You want to talk about transparency and lack of respect, in other words we did not know when you were contracting this international Bank of Miami, Mr. Speaker afterwards when we start hearing the names - names nobody in this country was even familiar with. I remember the song about the man who was complaining when the lady left him, he said the he bought he things that he couldn't even pronounced; Gucci. This super bond that we are now managing to tame, this super bond that we are restructuring consisted entirely of People's United Party government external commercial indebtedness."

"Where was the transparency when you contracted that UHS debt? When the ex-Prime Minister signed the guarantee that nobody knew about witness by the then attorney general the current Leader of the Opposition - where was the transparency then? Where was the respect?"

"Throughout I try to keep the nation apprise by way of the press conferences. We made clear that there were details that had not yet been finalized that we could not share. In general terms the people of this country have been following along this magnificent work in progress and they have no complaints to make about any lack of consultation. I will plead guilty to the fact that we did not specifically consult with the People's United Party. I will plead guilty, I will gladly plead guilty, I will proudly plead guilty to the fact that we did not kept them abreast because as the Honorable of Education has said if we had done so it would have meant that we would have been sharing critical details with quite frankly in terms of this process the enemy or at least the consort or the hand maiden of the enemy - that would have been a grotesque and I for one am not in that."

And to go over it in brief, some of the key features are: a 10% discount or haircut, maturing in 25 years time, which will bring it to the year 2038 rather than 2029 which was the maturity date for the original Superbond. For the first five years, the coupon rate is 5% and then it steps up to 6.78% for the remaining period.

Notably, the interest owed to bondholders up to September 2013 won't be paid, it will be capitalized?- a savings for Belize of 76 million dollars. Also on the upside for Belize: no consent fees are being paid to bondholders, and there are no value-added incentives given to bondholders:?such as oil certificates or GDP warrants. If those had been given, bondholders would have gotten a cut of future oil revenues, or a slice of the GDP if it grew beyond a certain level, as a compensation for their losses. But, no warrants means that they won't get any added portion of future growth in oil or GDP.

All told - as the PM pointed out, the net present value losses to bondholders are approximately 43.25% - which means the same amount in savings for Belize.

It's a good deal for Belize, but not yet not a done deal. It will be launched on Friday and to make it work, 75% of the bondholders would have to buy in - that's what triggers what's called a collective action clause - which then forces the holdouts to accept the new bond offering. We mention that caveat because according to the Prime Minister there are forces hard at work trying to undermine the bond offering. He explained...

Prime Minister Dean Barrow
"There was what a friend of mine refers to as the "the game behind the curtain" being played by the Ashcroft Alliance. Designed of course to wreck any agreement between Belize and Its bond holders. People in this country have seen the efforts mounted by the so-called Belize Debt Watch. They have seen the campaign of mis-information. Belize Debt Watch - the ads are prepared by Godfrey Smith a known agent of Michael Ashcroft voiced to some extent by Ashton Longsworth Belize Bond Group advocating directly to bond holders that no interest rate reduction should be given to Belize. Belize Bond Group - we have not been able to find out - they are operating anonomously - we Belize again that its part of the Ashcroft Alliance. The Ashcroft Alliance has denied it but certainly in terms Belize Debt Watch being handled local players that are just name - tied to the Opposition they endorsed this super super bond or debt slavery plan for Belizeans. Mr. Speaker if we were have to pay out immediately US$135.3 million dollars, if we were to saddled ourselves with a $1.033 billion dollars super super bond so that according to the Ashcroft Alliance we could pay their claims with respect to the nationalization in full I suspect that we would deserve a fate that would see the people of this country march every single one of us outside into the public square and hang us from the nearest tree."

7news has seen the email being circulated by the so-called "Belize Bond Group." It warns bondholders that government will give teachers and public officers a 10% pay raise for 2014 through 2017, quote "at the expense of bondholders'." It recommends? that all bondholders quote, "refrain from accepting this bond exchange." So with that kind of holdout campaign being pushed from some quarters, the three weeks ahead will be the true test - but Government sources say that if the bondholders don't accept this deal, they might not be seeing another any time soon.

Channel 7


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#457974 - 02/13/13 02:52 PM Re: Prime Minister: New Debt Terms on Defaulted Bond [Re: Marty]
Marty Offline

Superbond restructure passes through House

The House of Representatives passed in one sitting today, the terms of the restructured superbond; it goes before the Senate this Wednesday. The Opposition complained it had not been privy nor consulted on the new debt terms of the one billion Belize dollar superbond so there was little debate on the bond itself and by early afternoon, the external debt restructuring got the nod of the House. Prime Minister Dean Barrow disclosed an extension in maturity and lower coupon payments. News Five’s Jose Sanchez has details of the restructuring.

Jose Sanchez, Reporting

A special sitting of the House was called for passing the bill to restructure the superbond. Prime Minister Barrow explained that there is close to a decade added on to the payment plan; over a hundred million US dollars written-off the debt; and current rates are a forty percent reduction under previous terms.

Prime Minister Dean Barrow

Dean Barrow

“A twenty-five year maturity ending in 2038. This is nine years more than the current maturity under the superbond which expires in 2029. So there is nine years more and the new bonds have a maturity trajectory of twenty-five years to expire in 2038. Second key feature, Mister Speaker, there is a ten percent principal haircut off the top. So immediately, approximately Belize one hundred and eight million dollars is to be written off the current super-bond indebtedness. Third Mister Speaker, the initial interest rate coupon is for five percent lasting for four and a half years; stepping up then to six point seven-eight-eight percent for the remaining life of the new bonds. Recollect that the present interest rate under the superbond is eight point five percent. Therefore, the new initial interest rate represents a forty-one percent reduction from the current superbond interest rate. And the subsequent step interest rate represents a twenty percent reduction compared to the current eight point five percent. There is a grace period of six years before principal repayments commence, even though the bond holders in exchange for the substantial relief argued for earlier principal repayment. Government of Belize was able to hold the line and 2019 continues to be the year when principle payments begin.”

The restructured deal also included the capitalization of the interest that had accrued from partial coupon payments made in late 2012.

Dean Barrow

“This actually amounts to seventy-six point four million dollars and had we not, as part of restructuring, been able to secure the capitalization of the interest—remember we did not pay half of the last coupon payment and all that interest continued to accrue—if we had not been able to secure the capitalization of this seventy-six point four million Belize dollars in interest, we would have had to pay that sum in cash in September of 2012 and of February twentieth of 2013.”

The restructuring exercise was expected to cost about sixteen million dollars, but the government will now pay three million Belize dollars to close the deal.

Dean Barrow

“We will pay only one point five million U.S. dollars of the creditor committee expenses. Those expenses have been pegged by the creditor committee as being in the range of eight million Belize dollars and the argument was that since we were the ones triggering the restructuring, we should pay all of the creditor committee costs. We refused to do that and we were able to in fact get the committee to accept one point five million U.S. dollars. The rest of creditor committee cost will have to be borne by the bondholders themselves.”

Francis Fonseca

The Leader of the Opposition, Francis Fonseca, believed the government might have negotiated a better deal if the P.U.P. was involved in the negotiations.

Francis Fonseca, Leader of the Opposition

“Our very strong objections to and disapproval of the manner in which the government, and the Prime Minister in particular; has managed this entire debt restructuring exercise. Their approach has been secretive, it has been arrogant, it has been reckless and it has been divisive. Absolutely no information, Mister Speaker, has been shared at any point during this process with any member of the opposition. In fact, the Prime Minister publicly boasted that he would not be sharing any information with opposition.”

But the House Meeting temporarily cast the bond aside, and returned to the regular business of politicians provoking each other.

Francis Fonseca

“Get to work providing more resources to education and health; get to work.”

Patrick Faber

Patrick Faber, Minister of Education

“Mister Speaker on a point of order, can the member stay to the motion on hand please? He is all over the place now. Can he focus on the superbond motion Mister Speaker.”

Francis Fonseca

“Thank you Mister Speaker. I know the member for Collet still at this last moment, last minute, trying to win the support of his leader for his failed bid, deputy leader. But it is too late my friend from Collet, it is too late. The leader has declared his support for the member for Orange Walk North. Mister Speaker, and get to work.”

Patrick Faber

“While it is that I am in a race for the deputy leadership of my party that is no business for him. He is not of this party and should not meddle in that. But since he is meddling in our affairs, let me remind him that he too was once in a race and was rejected by his party to lead and after he was rejected, they gone down the line to everybody else except him and now he dah last resort leader now.”

The bond went through all three readings and the PM said the deal with Greylock Capital would be re-launched either Thursday or Friday. Reporting for News Five, Jose Sanchez.

Channel 5


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#458087 - 02/15/13 02:43 PM Re: Prime Minister: New Debt Terms on Defaulted Bond [Re: Marty]
Marty Offline

No Tax Hikes! No Oil Revenue! No GDP Cut! No IMF!!! Legislature approves Restructured Superbond

On Tuesday, February 12th, Prime Minister Barrow introduced a motion in the House of Representative that he refers to as a “promise fulfilled”. That motion is the “Government of Belize- External Debt Restructuring Motion, 2013”, which features new terms to the infamous Superbond. During a speech in San Jose Palmar Village in Orange Walk East on Sunday, February 19th, 2012 Prime Minister Barrow said:

“I am serving you all notice. Look out and get ready because Belize is coming. There is no doubt that the People's United Party, in terms of this Superbond, did a horrible thing to the people of Belize. But, I know from a long time that a wise man said it eons ago, 'You can't have a bad borrower, if you don't have a bad lender.' So all of you all out there, who were happy to lend the PUP this money, and burden us until thy kingdom come with this Superbond well hear this: we are coming back to you, and we are telling you that you will renegotiate that. You will take down that interest rate, and you will spread the maturity period out over a far longer time. We will stop paying that 8.5% and 80+ million dollars a year because we need that money to spend on the development of Belize for the people of this country."

In the House of Representatives on Tuesday, Prime Minister Barrow explained that not only was the debt restructuring team able to negotiate a deal that include a decrease in interest rates and longer maturity period, but they were also able to get a ten- percent principal haircut, which is equal to approximately BZ$108 million. The size of the new bond is US$529,928,800 with a twenty-five-year maturity period ending in 2038. The original maturity date for the Superbond was 2029. The interest rate for the new bonds from March 20th, 2013 to August 20th, 2017 is 5% to be paid every six months. After August 17th, 2017 the interest rate will be 6.767% until the final maturity date on February 20th, 2038. The original interest rate for the Superbond was 8.5%. Belize will experience debt relief of BZ$236 million from 2013 to 2017. In net present value, the new deal will see Belize pay 56.75 cents per every Superbond dollar. That is an overall reduction of 43.25%.

During the restructuring process, Belize stood firm in negotiations with bondholders despite pressure from the international financial institutions; including the U.S. Treasury Department. Prime Minister Barrow said, "Even at the price of losing the partial IDB guarantee that we sought, this Government resisted the preposition of an IMF program notwithstanding the pressures brought to bear on us by the US Treasury, by the IMF itself and by the other IFIs.” It is no secret what an IMF program would mean for Belize. In 2011, the IMF released a report on Belize in which it recommended that the Government of Belize raise the General Sale Tax (GST) from 12.5 to 15% and withdraw its tax concessions on basic food items and medical supplies. Economists around the world have criticized the IMF, saying that their programs are counterproductive and retard social stability. Their structural adjustment program lead to an increase in poverty because it mandates Government to cut public spending and increase taxes in order to balance budgets. Such policies in a weak economy make it even more difficult for the poor to strive since social programs are often the first ones cut.

The bondholders made several requests during the negotiating period. One was that Government include a provision that would see a share of revenues from future oil discoveries passed on to bondholders. Another was for bondholders to receive a bonus if GDP grows by a significant amount. They also requested that Government pay the expenses of their creditor committee which amounted to US$8 million. In the final deal, no provision for a share of oil revenue or GDP was included and Government agreed to pay only US$1.5 million for the creditor committee’s expenses. The rest will be covered by the bondholders themselves. Additionally, $76 million which had accrued in interest during the negotiation period will be attached to the principal of the bond and will not have to be paid up front by Government.

Prime Minister Barrow hopes to launch the new bonds on Thursday or Friday, February 14th or 15th.

The Guardian


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#458415 - 02/20/13 02:17 PM Re: Prime Minister: New Debt Terms on Defaulted Bond [Re: Marty]
Marty Offline
Belize Bondholder Group Agrees To Restructuring

A group representing a majority of Belize sovereign bondholders has agreed to a restructuring that will give the country nine more years to pay off some of its debt.

The Coordinating Committee of Belize Bondholders said in a statement Tuesday that its members agreed unanimously to exchange their old dollar-denominated bonds due 2029 for new ones that fall due in 2038.

The negotiations that began late last year led to "what was in the end a fair and transparent process," said AJ Mediratta, co-president of Greylock Capital Management and co-chairman of the bond holder group, referring to a series of announcements the Central Bank of Belize made along the way concerning its progress.

Under the terms of the debt exchange, the Belize government will reimburse the committee for certain expenses, including reinstating principal in the event of a future default.

Belize has $548 million of dollar-denominated bonds outstanding.

Wall Street Journal

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#458416 - 02/20/13 02:28 PM Re: Prime Minister: New Debt Terms on Defaulted Bond [Re: Marty]
Marty Offline

Creditor Committee accepts new bond offer

There has been a breakthrough in the superbond restructuring. The Belize Coordinating Committee has announced that all of its members have agreed to tender their old bonds for the new exchange offer. According to AJ Mediratta, Co-Chair of the Committee, “The Committee appreciates the Government of Belize’s willingness to negotiate in good faith and to adhere to what was in the end a fair and transparent process.” The government has pledged to pay some of the cost of negotiating the new bond and the Committee indicates the new bonds have protections in place including a contingency account for trustee indemnification; a principal reinstatement in the event of a future default and a most favored creditor provision.  The Committee has been working along with an Ad-hoc group which together represents three hundred and thirty-eight million of the five hundred and forty-eight million US of outstanding bonds. That means both groups combined represents sixty-two percent of bondholders. The press release from the committee did not say if the Ad-hoc committee accepted the offer. However, the Government’s lead negotiator Mark Espat says that the G.O.B. takes the Committee at its word and the endorsement and commitment to tender, makes the attainment of seventy-five percent necessary participation, much easier to achieve. The initial proposals forwarded to the coordinating committee requested a forty five percent haircut, but government eventually agreed to a much reduced ten percent haircut at the close of the negotiations. On February twelfth, the Prime Minister took the negotiated bond to the House of Representatives.

Dean Barrow [File: February 12th, 2013]

“A twenty-five year maturity ending in 2038. This is nine years more than the current maturity under the superbond which expires in 2029. So there is nine years more and the new bonds have a maturity trajectory of twenty-five years to expire in 2038. Second key feature, Mister Speaker, there is a ten percent principal haircut off the top. So immediately, approximately Belize one hundred and eight million dollars is to be written off the current super-bond indebtedness. Third Mister Speaker, the initial interest rate coupon is for five percent lasting for four and a half years; stepping up then to six point seven-eight-eight percent for the remaining life of the new bonds. Recollect that the present interest rate under the superbond is eight point five percent. Therefore, the new initial interest rate represents a forty-one percent reduction from the current superbond interest rate. And the subsequent step interest rate represents a twenty percent reduction compared to the current eight point five percent. There is a grace period of six years before principal repayments commence, even though the bond holders in exchange for the substantial relief argued for earlier principal repayment. Government of Belize was able to hold the line and 2019 continues to be the year when principle payments begin.”

This morning we forwarded questions to the Central Bank of Belize to clarify the provisions in the new offering and how soon do they expect to reach the seventy-five percent bondholder participation threshold that the government said was necessary to close the deal. The Central Bank has indicated that a response will be forthcoming soon. But moments ago, News Five received a written response from Glenford Ysaguirre, Governor of the Central Bank of Belize. Rather than the sixty-two percent reported widely, Ysaguirre says that it is his understanding that the Creditors Committee (CC) represents holders of the value of sixty-six percent of the super bond. The Central Bank Governor goes on to say, “The government, no doubt, would be encouraged and pleased with the news that the bond holders represented by the Committee have accepted en bloc the new 2038 deal. The remaining thirty-four percent is held by other individual bond holders who are not represented by the CC and must therefore be dealt with individually by G.O.B. Under the Super Bond Class Action Clause (CAC), the new offer must be accepted by holders of at least seventy-five percent of the value of the bonds for it to be enforceable on all bond holders. Therefore, besides the sixty-six percent of the CC, G.O.B. needs the acceptance of holders of another nine percent to meet the CAC threshold of seventy-five percent. The new bond offer will stay open for three weeks at that time G.O.B. will know if it was successful in reaching the seventy-five percent threshold.”

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#459797 - 03/09/13 02:10 PM Re: Prime Minister: New Debt Terms on Defaulted Bond [Re: Marty]
Marty Offline

Superbond 2.0: The Deal Is Sealed

A release posted held an hour ago on the Central Bank of Belize Website announced that Superbond 2.0 has been fully subscribed. That means the deal to renegotiate this huge chunk of Belize debt is now complete, all the bondholders have subscribed to the terms of the bond.

Within the next few days they will be given the new bonds in exchange for their old ones. How did it happen? Well, the bond offering went public 3 weeks ago - and the understanding then was that once 75% of the bondholders buy into the new terms, it would trigger what's known as the collective action clause, and force in all the remaining hold-outs.

Well, the release explains that, they got more than the 75%. It says, quote, "holders of 86.17 percent of the country's U.S. Dollar Bonds tendered their bonds…to exchange those instruments for new Belize U.S. Dollar Bonds."

That spells success, and significant debt relief for Belize. How much?

Well there's a 10% principal haircut off the top, amounting to a discount of $108 million dollars. And over the longer term, debt service reductions of $236 million dollars during the 5 year period between 2013 and 2017 and $494 million dollars during the 10 year period between 2013-2022, amounting to a reduction in net present value terms of over 43%.

The Superbond offering is expected to be formally closed next week.

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#460189 - 03/14/13 02:19 PM Re: Prime Minister: New Debt Terms on Defaulted Bond [Re: Marty]
Marty Offline

Superbond 2.0 Gets Ready To Close Offering

The success story of the Superbond 2.0 has been told forwards and backwards - for the Government, it has been like an unending ecstasy. Since late December, two press conferences, and a house meeting to tribute the success of the new bond have been held.

And today the Prime Minister convened what promises to be the last press conference on the Superbond - as it has been 100% subscribed, and the bond offering will close either Friday or Monday. So, today's press conference was like a long last farewell, in which the Prime Minister had to restrain himself from gushing:

Prime Minister Dean Barrow - Prime Minister of Belize
"Some, ladies and gentlemen, 494 million Belize dollars less in debt servicing over the next 10 years, we thinks that's historic on any reconing, and the fact that we have; with this relief, been able to avoid any kind of tax heights. The gross that relief attained in 2012, 2013 and the coming 5 and 10 year periods, you will see in 2012 it's 22 million, 2013 - 66, 2013 to 2017 - 236, 2013 to 2022 - 494. There is a possibility that, with a little bit of luck and the kind of growth last year that we saw being replicated by and large, we can actually see Belize's debt to GDP ratio full to perhaps 60% by 2017. That, of course is debt, heaven, but the fact that this kind of nirvana is even within Belize's reach, I believe is testament to how successful - precisely how successful the debt restructuring team has been. Remember that we didn't pay the coupon payment that had become due in august. We didn't pay the coupon payment that would have become due in February, and so that, all together, these are rolled up into the new bond and we thereby saved 76.4 million dollars by way of these cash payments for gone. There's a point to be made; I think our financing gap this year FS is what; 84 million. If we had not succeeded, you would have had to add that 76.4 million to the 84 million, and of course that would have meant that we would no doubt have gone over the fiscal cliff."

Of course, the Ashcroft Alliance continues to hover over the entire affair like a ghost of events past. It seems the former owners of Telemedia and BEL don't like a clause in the Superbond 2.0's fine print which says that Government cannot settle with them on any better terms than it settled with the Superbond holders.

It also stipulates that the former utility owners will be compensated in Belize dollars. The PM said this swirl of conditions could create one last rush of legal drama:

Prime Minister Dean Barrow
"When the Ashcroft Alliance and the Fortis people complained about this being a fetter on Government's discretion to negotiate a settlement with them in an open-ended fashion; that presupposed first of all, that we would be inclined to go with any settlement that would see these people being paid in foreign currency - in US currency. But, we expect that these things will continue to make their way through the courts, and that ultimately the compensation that will be ordered, will be in Belize dollars. I only raise this because; while we've reach the threshold, while the exchange offer is- or the exchange process is completed, until we formally close the deal on Friday or Monday, you can't put it pass these people to try to run to court., to see if there's some way they can bring this thing to some kind of a halt, even though it appears to me that this particular train is unstoppable, and has almost reach the station."

And so while it is not a done deal yet, it is almost there. And while the savings for Belize are enormous, so are the costs. The Prime Minister didn't have an answer today, but we know that doing business at this level when international law firms and consultants have to be hired can be very costly. And while he didn't have a figure, the PM conceded those costs:

Prime Minister Dean Barrow
"There's nothing to hide. It's - the cost is, in Belizean terms, astronomical, but when you look at the savings that we've realized, it's a price we had to pay, and there's no question of wanting to hide it - conceal it at all."

The PM committed that Government will publicize those costs...

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#460195 - 03/14/13 02:32 PM Re: Prime Minister: New Debt Terms on Defaulted Bond [Re: Marty]
Marty Offline

Belize Bond 2038; the newly minted superbond

The much condemned and now newly minted super-bond is now the Belize Bond 2038, a done deal with a majority of bondholders signing on and the balance will follow suit under a collective action clause. The numbers have been thrown about since last week, but today Prime Minister Dean Barrow was all smiles as he called the occasion reason for celebration. The stakeholders in the restructuring process were on hand for that celebration and freelance reporter Mike Rudon has the story from the Biltmore Plaza.

Prime Minister Dean Barrow

“The gross debt relief attained in 2012/2013 and the coming five and ten year periods; you will say in 2012, it is twenty-two million, 2013 sixty-six, 2013-2017 two thirty-six, 2013-2022 four ninety-four.”

Mike Rudon, Reporting

That’s four hundred and ninety four million Belize dollars, which the Prime Minister says will be saved between 2013 and 2022 because of the restructured bond. And that restructuring will have all sorts of positive spinoffs, according to the PM, including an unprecedented debt to GDP ratio.

Dean Barrow

Dean Barrow

“There is a possibility that with a little bit of luck and the kind of growth that we saw last year being replicated by and large, we can actually see Belize’s debt to GDP ratio fall to perhaps sixty percent by 2017. That of course is debt heaven at least in terms of the internationally accepted benchmarks.”

The Prime Minister makes much of the fact that the restructuring was done in a timely fashion, and much of the fact that they did so while resisting the demands by creditors.

Dean Barrow

“We do make much of the fact that we were able to resist those demands; no GDP warrants, no oil warrants, no consent fee, no funded trustee indemnification. We paid committee expenses of one point five million when in fact the demand we had been faced with initially was for three point five to four million. Perhaps most important of all, the accrued interest—remember we didn’t pay the coupon payment that had become due in August, we did not pay the coupon payment that had become due in February—and so that all together these are rolled up into the new bond and we thereby save seventy-six point four million dollars by way of these cash payments forgone. There is a point to be made. I think our financing gap at this year FS is eighty-four million. If we had not succeeded, you would have had to add that seventy-six point four million to the eighty-four million and of course that would have meant that we would no doubt have gone over the fiscal cliff.”

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