Belize offer valued at 80 cents
Felix Salmon | Dec 13, 2006
OK, enough bullishness on the US - time for bullishness on
Belize! Remember its official exchange offer? Well Bear
Stearns, by far the strongest investment bank in the
Caribbean, likes it a lot, valuing it as high as 80 cents
on the dollar. Here's Carl Ross:
The latest offer is a significant improvement (nearly
20 points in NPV terms) over the first offer that was
floated on October 20. We believe that it more accurately
reflects Belize's ability to pay, and for this reason we
had anticipated an improved offer. We believe that
participation will be high for three reasons: 1) the offer
is significantly improved and could result in
post-restructuring valuations of around 80 cents on the
dollar; 2) the offer came as a result of relatively
transparent consultations with bondholders; and 3) the
press release indicates a threat that bondholders who do
not tender should not expect to be paid on an ongoing
basis. Given the unfortunate experience in Argentina, this
should be viewed as a credible threat. The focus will now
turn to launching the exchange offer and completing the
exchange by late January.
All sounds very smooth to me. But of course the government
says that existing bondholders should not expect to be
paid. All restructuring governments say that. You pretty
much have to say that if you're doing a restructuring. But
just because Argentina hasn't paid its $20 billion in
holdouts does not mean that Belize's pro-forma declaration
is really a credible threat