Caribbean nation on track to strike first debt restructuring with green tinge

Belize is inching towards a deal with international bondholders after admitting it cannot afford to pay back its debt, and counting on an unusual asset to help: its coral reefs.

Earlier this month the Caribbean nation, with its tourism-heavy economy ravaged by the pandemic, agreed to buy back its only international bond from investors at a huge discount, using cash lent by the Nature Conservancy, a US-based environmental group. As part of the deal, Belize will pre-fund a $23.4m endowment to support marine conservation projects on its coastline, home to the world's second-largest barrier reef.

Some more investors still need to agree to the scale of the buyback discount before the deal is done. But if Belize can achieve the approval it needs on this $530m bond, the country could secure the first green-tinged debt restructuring, capitalising on the hunger among big fund managers to demonstrate their commitment to environmental, social and governance-driven investing.

A group of investors led by GMO, Abrdn and Greylock Capital, representing half of the bondholders, has already given the scheme its blessing. Carlos de Sousa, a portfolio manager at Vontobel Asset Management - a member of this group holding about 10 per cent of the bond - said the proposal chimes with his company's focus on ESG.

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