PM Barrow leads team to second meeting with Superbond holders
Saturday, December 10th, 2016
The Prime Minister of Belize Rt. Honorable Dean Barrow left the country on Saturday, December 3rd enroute to New York City, New York USA where he attended a meeting discussing the Superbond. Barrow was joined by Financial Secretary Joseph Waight and Economic Ambassador Mark Espat. During the reunion, the trio once again tried to finalize an agreement with bondholders regarding the structuring of the Superbond payments.
The Government of Belize (GOB), through an official statement issued by the Central Bank on Tuesday, December 6th, made a call to for comments from bondholders on possible structures to amend the Bond. The possibility to amend the financial terms of the Bond is crucial for Belize and the sole purpose of the meetings is to keep the negotiating process on sustainable footing. The next payment of $13 million Belize dollars is due in February and a second one in August. However, the second payment is set to increase payables up to $17 million. This increase is way ahead of the principal payments that are due to start in 2019.
GOB is not appeased with the prospect of the talks so far, and the meeting in New York serves as another effort to avoid a rigorous fiscal agenda, which will include tax reform. The negotiating team led by Barrow is seeking changes as to how and when the principal payments are made, softening the amount of monies due. Also, the team is trying to drag out payments beyond the principal maturity date of 2038. But, in order for these terms to be passed, at least three-quarters of bondholders must agree to these proposals by GOB. However, there is no possible guarantee as to what the bondholders will find acceptable, since they have not seen one principal payment after the second restructuring in 2013.
During the meeting in New York, on Monday December 5th and Tuesday December 6th, Barrow made a presentation to a select group of bondholders. Apparently, they were not quite convinced by the presentation the Belizean delegation provided. The information presented to the creditors is an attempt to capture all that went wrong or what adversely affected Belize’s ability to meet payment deadlines to bondholders. In their presentation, they explained that the country’s capacity to pay was inhibited by various factors, mainly the one-off payments related to the nationalization of Belize Telemedia Limited, Belize Electricity Limited, and adjustments to public sector wages.
Additionally, the adverse fiscal consequences of weak economic conditions and the recent deterioration in public finances will contribute in the ever rising volume of debts. Government also acknowledged that the funding gap for domestic credit capacity is too large, and emphasized that the Superbond is the single largest category in Belize’s debt profile. Therefore, due to the size of the Superbond, it will be inevitable not to prioritize it when it comes to solutions to Belize’s debt predicament.
Barrow, along with his negotiating team were to return to Belize on Wednesday, December 7th and update the country regarding the outcome of the meetings. However, Prime Minister Barrow had to extend his stay in New York City due to health issues until Sunday, December 11th.
During his absence, Deputy Prime Minister Honorable Patrick Faber is acting Prime Minister.