The due date for a five percent interest payment on Belize’s bonds has come and gone without Government forwarding the .3 million to its bondholders. That date was Monday, February 20, and since the payment is now late, a 30 day grace period has kicked in. If Belize does not make the payment by March 22 the country would officially default on the loan. This is bad news for Belize but worse news for the bondholders.
A default by Belize would probably trigger a downgrade in the country’s credit rating. This means that loans to the country would be tagged with a higher risk. High risk loans come with more conditions and higher interest rates. This would be of great concern to Belize if the Administration was dependent on loans from commercial banking institutions. The Barrow Administration is not a player in that market; therefore, its concern for credit ratings is minimal. On the other hand, the bondholders are owners of stocks that would be much tougher to sell if they move any closer to junk status. Those bonds aren’t anything the country of Belize is or should be intending to roll over; therefore, it is their baby. It is in the best interest of the bondholders to ensure that Belize is in the best position to meet its payment obligations and if that means a restructure is necessary by March 22 then it is essential for the bondholders that such an agreement is reached. When everything on the table is weighed it turns out that the Superbond is as much a problem for the bondholders as it is for Belize.
Prime Minister Barrow met with the Co-Chairs of the Bondholders Committee, AJ Mediratta and Carl Russ, at the end of last week, which is a signal that the curtains are closing. In the early stages of negotiations, PM Barrow meets only with the Belize negotiation team in preparation for their meeting with the bondholders’ committee. Belize’s team includes Ambassador Mark Espat, Financial Secretary Joseph Waight, attorney Lee Buchheit and advisors from CitiGroup. In this last meeting, Prime Minister Barrow and Attorney General, Michael Peyrefitte, “met not only with our own advisors but with the bondholders, or rather, to be more accurate, with the two co-chairs of the committee representing the bondholders,” said PM Barrow. “We had a long exhaustive and perhaps exhausting meeting on Thursday. I would characterize the meeting as having been tough but I’m happy to say that it never became contentious or if it did become contentious it never became rancorous. There was no bitterness, no discourtesy. At the end of the meeting my assessment is that the positions have been greatly narrowed.”
The mere fact that Prime Minister Barrow himself met with the bondholders’s committee means that negotiations are in the final stages. Taking the Attorney General along is another sign that a deal is near. Prime Minister Barrow said, “Government left off then from that meeting with a new position in which there has been movement on our part, but a new position that really represents our final position…I really hope that we can wrap this up well before the expiration of that grace period.”
