Financial adviser confident of super bond renegotiation deal


Allan Slusher

Belize's external debt, also known as the sovereign bond and commonly referred to as the super bond, continues to generate a lot of interest in the international financial services sector. Following the missed coupon payment of twenty three million US dollars last week, the rating agency Standard and Poor downgraded Belize and was followed later in the week by Moody's investor services. In the case of the Wall Street-based Moody's Investors Service, the agency lowered Belize's local currency bond and deposit ceilings to B2 from B1. The foreign currency country ceilings on bonds and deposits remain unchanged at Caa2. Moodys in its report released late last week, said it expects the government will formally default following the expiration of a 30 day grace period in September, unless a restructuring agreement is reached before then. Belize's debt renegotiation team, headed by Ambassador Mark Espat was in Washington, D.C. over the weekend for meetings with officials of the Inter-American Development Bank and the International Monetary fund. According to Minister Godwin Hulse, who is also a member of the debt restructuring team, the talks with the IDB were very positive and now the team awaits support from the IMF. Belize has published its three-pronged offer towards a negotiated restructuring of the five hundred and forty seven million US dollar foreign debt. Advisor to the Minister of Finance Allan Slusher today told Love News that those three scenarios published earlier this month are solid starting points for the government of Belize, given what is at its disposal going into the negotiations.


Slusher says he is optimistic that the solution will come after what he called a choreographed maneuvering by the bond holders.

According to Moody's Investor Services, the super bond, accounts for 48 per cent of total central government debt and 57 per cent of Belize's external debt. The agency noted that the indicative scenarios released by the government on August 8 - a par bond and two discount bond options - resulted in bondholders absorbing losses of 70-80 per cent in net present value terms. Moody's continue to maintain that, quote: "the government's decision to trigger a credit event and force investors to take deep haircuts is a credit negative development that increases the odds of a protracted debt exchange process," end of quote.

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