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Bondholders Agree to Grant Belize an Extension of the Grace Period for the Coupon Payment

The Briceno administration can breathe a bit easier tonight as the Superbond creditors have agreed to grant Belize an extension of the grace period for the seven-million US dollar coupon payment that became due on May 20. After praying and hoping for several weeks for a response from the bondholders, the government was informed that their request had been granted and that they, the bondholders, are now open to good faith negotiations that will ultimately lead to what the bondholders refer to as, quote, “a durable solution to the economic problems that underlie Belize’s debt-servicing challenges”. End of quote. The approval does give Belize room to see how it will manage to double up on its coupon payments as another will become due in August. Lead Senator Michael Peyrefitte, in an interview last Friday, explained that while he has offered to help the government, he is not sure what could be done between now and September 19 in making good on the coupon payments.

Michael Peyrefitte, Lead Senator, UDP: “It’s not unreasonable to ask for an extension if you believe that you need the time. The question is what changes could you possibly see happening in such a short period of time. Remember when we defaulted on May 20th it was kind of like a soft default, you have thirty days before it becomes an official default but still your rating is already beginning to fall. When it’s early like this and everybody you’re far apart and you’re trying to feel out each other, this is a new government compared to the last one then you have a lot of tense moments between the bond holders and the government. And so this will go on for a while I think. I know the Prime Minister had indicated in his budget speech that by May this process will be wrapped up. Well I think you know he’s a rookie in these matters and he couldn’t appreciate what it takes to restructure a bond. But I don’t think that it’s unreasonable to ask for an extension. If you need the time ask for it. My question is what do you do during that time ? And let me say, because people have been asking me about this. I have offered to help the government. I know a lot of the players on the bond holder side and I had offered to kind of be like a bridge between the two sides so that I can familiarize the government with the players and the players with the government and the government has flatly rejected that. So I just want the public to know and I hope you play this on your newscast that this current process that’s going right here the United Democratic Party has not been asked to be a part of it.”

Reporter:  One of the criticism I think out there, one of the bond holders I believe he gave an interview to a media house he also said that Belize is perhaps moving forward or perhaps already seen as a serial defaulter. How do you think this augers for us as a nation ? 

Senator Michael Peyrefitte, UDP Party Chairman

Michael Peyrefitte, Lead Senator, UDP: “Well not good but then they always have to say that. I think you have to understand in an negotiation they have to make it seem as if though they’re taking some beating and they have to bring pressure upon us to get the best possible deal but they know that they want to get paid and they know that they have to put us in a situation where we can develop to enable to pay so they can’t come hard either. I think that’s just a part of the initial discussion and deliberations that that type of talking has to happen because you could ask yourself how is it that we are such serial defaulters but yet they still deal with our bonds, yet they still want to do business with the country ? Well that’s just a part of the game.”

The Government of Belize had asked to be given up until September 19, 2021 to make good on the May 20 coupon payment. The issue with that is that by September 19, the 30-day grace period for another coupon payment due in August would expire. It is a process called, consent solicitation to the bondholders which, as we noted, had been given the green light. With the bondholders now having a new non-disclosure agreement in effect, it now opens the door for negotiations on the possibility of a fifth restructuring of the Superbond. Recent statements, however, by the bondholders have been insisting on an IMF Economic Recovery Program for Belize which the Briceno administration has noted time and time again that they will not do it. Instead Prime Minister John Briceno says they will be sticking to a home grown plan to rebuild the economy. According to the CEO in the Ministry of Economic Development, Dr Osmond Martinez, a strategic plan will be revealed shortly on just how the government plans to get the job done.

Osmond Martinez, Ministry of Public Service: “I am very confident that the home grown plan will be one that well help us to bounce back. I am 100% sure that within two years we will start to see this economy coming back to where it was in 2019. But we have an excellent home grown plan. There is an economic development strategy that will be published pretty soon, we are working on it. One that is very careful at this same time it’s robust and one that we will execute well and I am sure that the recovery is coming. One of the things that we will be focusing on is in the reduction of poverty, social protection, to introduce science and technology to enhance exports, reduce imports and generate jobs. To enable a friendly environment for investors, to be energy self sustainable so these are the points that we have to look at in order to move forward and have a healthy economy. So I am fully in support of the home grown economic recovery plan.”

The five hundred fifty-million-dollar bond, which traded as low as thirty-two point five cents on the dollar in the second half of April, last traded at thirty-eight point five cents. The Central American country has been hit hard by the impact of COVID-19, with a sharp fall in tourism revenue and a rise in spending.