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Preparatory Stage Complete for Upcoming Meeting with Bondholders

Prime Minister Dean Barrow, along with Financial Secretary, Joseph Waight and Ambassador for Economic Affairs, Mark Espat, returned to the country on Saturday after meeting with Government’s legal advisors. The preparatory meeting was held in New York and was focused on restructuring Belize’s bonds due 2038. Government asserts that the country’s economy has significantly underperformed in comparison with the projections used at the time of setting the terms of the 2038 Bonds. A strategy has been agreed on and now the next step is to engage the bondholders in a face to face negotiation by the end of this month.  Prime Minister Barrow says they are convinced that a restructuring is needed in order to sustain the bonds.


“We are going through some difficult times, the bottom line is though that a number of the assumptions that were made in common between ourselves and the bond holders when we last restructured have not proven to be valid or have not proven to be durable and so going forward we are convinced that we need a redo and this time the level of relief that we are looking for must be such that it will be absolutely sustainable even in the face of the vicissitudes that can overtake any economy so we are looking for a degree of relief that will mean that we do not have to worry in the short term, in the medium term even in the long term no matter what circumstances might overtake the country.

Belize’s 2038 Bonds were issued in 2013 and are the only Government debt securities outstanding in the international capital markets. Belize’s Ambassador Mark Espat explained what would be the most favorable scenario for Belize.



“I think there are only three possibilities in that regard, there is the coupon rate, the interest rate being paid, there is the time when the principal repayment is supposed to start which at this present time is August of 2019 and there is the ultimate maturity which is scheduled at this time for 2035, so those are the three elements that are going to be in play.”

Reporter: What are those numbers that you intend to look at and propose to those bond holders?


“No I think that would be premature at this point. The government of Belize in the terms and conditions of the bonds have an obligation to consult with bondholders and to confer with a creditor committee when such a committee is formed. We fully expect that that committee will be formed in the coming days and Belize will engage in those discussions in good faith with the ultimate objective as Prime Minister Barrow enunciated just now to ensure long term sustainability.”


“As I said the whole idea was to be certain that in terms of our game plan going forward we were all absolutely on the same page so that there could be no surprises. That was basically what that meeting was about, preparatory to the actual engagement with the bond holders which clearly by way of the others and Ambassador Espat will lead.”

This is the second time that Government will be restructuring the bonds and so the Prime Minister was asked if he believes that this will cause bondholders to question Government’s reliability to repay bondholders.


“I don’t know how the question of confidence going forward can arise, we are both in this and stuck with the arrangement which sees Belize as the debtor, these creditors who are the holders of the bonds. We are not looking to shaft the creditors, we are not looking to screw the bond holders, we are looking to ensure that our country finally obtains the relief that is for us, a sort of sine qua non, a relief that for us is absolutely critical. We believe that there is a way to do this without utterly as it were seeing off the bond holders. Clearly adjustments will have to be made but these are big people, these are experienced players in the market, they can understand as well as we do that circumstances change and circumstances have changed; apart from everything else there’s been the hurricane so we might be perhaps from one point of view a little too optimistic but we genuinely are convinced that we can do this, that we can work this thing out and reach a place that is going to be ultimately satisfactory to Belize without fundamentally prejudicing the bond holders.”

The country’s overall fiscal deficit expanded to eight percent of GDP in 2015. The sharp deterioration was explained by a one-off payment related to the settlement of liabilities for one of the nationalized companies. This deficit and partial settlement of liabilities related to the nationalized companies pushed the public sector debt to eighty two percent of GDP in 2015. As a fiscal measure, the authorities have increased their fuel tax, which is expected to increase revenues by close to one and a half percent of GDP.  The Government of Belize has retained Citigroup Global Markets Inc. as its structuring advisor and Cleary Gottlieb Steen & Hamilton as its legal counsel in this process.