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What Happens if Belize Falls Back on Blue Bond Payment?

During a joint press conference held this morning between the Government and TNC, the question was posed on what would happen if Belize cannot meet its payments for the Blue Bond.

Christopher Coye, Minister of State, Ministry of Finance, Economic Development and Investment: “With respect to loan in terms of getting an interest rate as low as we were able to get it we had to get political risk insurance through the US Government’s International Development Finance Corporation. We also got parametric insurance in the event of natural disaster and there are other supporting securities. There’s a debt service reserve account I think it’s roughly $10 million dollar debt service reserve account and I believe the TNC also backed between $20-30 million worth of its own investments as well as ten and a half million into the Belize Blue Investment Company and all those were sufficient enough to bring down the risk level and ultimately the cost of financing to us was reduced accordingly it also ensured that our rating on this Blue Bond was AA2 by Moody’s so the indication based on all those things is that it’s not a high risk opportunity for blue bond holders it’s actually a low risk opportunity because it has all those backing. With respect to the default I would say that is really a low risk but in the event of that event then the international development finance corporation would insurance under that would mean that they would have to kick in for the bond holders so the bond holders would still get paid and that would be pretty much after the debt service reserve account is exhausted. So there are a lot of mechanisms which would continue to ensure that the bond holders get paid.”

We’ll have more on the Blue Bond agreement in tomorrow’s newscast.