GOB unable to meet Superbond payment for August
Tuesday, August 14th, 2012
The Government of Belize today announced that it will not be able to meet its super bond payment to its creditors due for August 20th. The announcement was made via a press release from the Ministry of Finance shortly after midday on Tuesday August 14th. The Superbond payment amount due is US$23,497,211.11 at an interest rate of 8.5%. Prime Minister Dean Barrow is quoted in the release as saying that “The Step-Up Bond alone represents approximately one-half of Belize’s total recorded public indebtedness.”
After the re-election of the UDP administration into office, PM Barrow had appointed a negotiating team headed by former PUP Albert Division Representative Mark Espat to look at the Superbond negation to arrive at more manageable payment terms. So far the team came up with three possible alternatives to restructure the current payment.
- Scenario A sees the bond principal remain at par value having no reduction in the principal amount to be paid. It offers a 15-year grace period with a 2% interest rate and reaching maturity at 2062. Payments are to be made in equal semi-annual principal installments after the grace period.
- Scenario B has the principal discounted to 45% of the original amount, there is no grace period with principal payments being made at 1% through to 2019, 2% through to 2026 and 4% through to 2042, which will be the maturity date of the bond. In this scenario, payments are to be made in equal semi-annual principal installments.
- In Scenario C, the principal is also discounted to 45% of the original value with a 5-year grace period and maturity date of 2042. Interest rate would be at 3.5% throughout until 2042. In this scenario, the payments will be made on a monthly basis to cover both interest and principal after the grace period.
All three scenarios were met by stern disapproval by bond holders.
The announcement made today comes despite Prime Minister of Belize Hon. Dean Barrow’s announcement during the reading of the Budget estimate for 2012-2013 that money was allocated for the August payment to bond holders. With PM Barrow’s announcement today, it remains uncertain as to what will be the next step between the Belize Superbond team and the bond holders in the current restructuring negotiations.