Superbond holders want IMF arrangement


The newly elected Briceño administration is in the throes of international backlash as superbond holders are refusing to even meet to renegotiate the bond without an IMF arrangement.
In an article on written by Marc Jones titled, “UPDATE 2- Belize and its ‘Superbond’ holders clash over IMF help, the reason for this is detailed. According to Jones, holders of the bond urged for our government and economic decision-makers to agree to a program from the International Monetary Fund (IMF), but the government refused. As a result, the country’s bid for the bond’s 5th restructure in just 15-years is “threatening to turn sour”, especially since our government has accused creditors of canceling a pre-planned Zoom video conference. In the piece, the country is referred to as a “serial-defaulter”, one who is looking to restructure a $550 million Superbond that emerged from a 2006-2007 restructuring. The bond contributes to the country’s 133% debt to gross domestic product (GDP) ratio, one deemed unsustainable by the IMF. Turning down help from the IMF has not only left the people who made that decision, the PUP, in a crisis but also the people of Belize as we continue to earn less but are forced to spend more after the prices for basic commodities continue to skyrocket. COVID-19 has put quite a strain on our economy, almost completely taking tourism revenue to 0%. That reality, coupled with support spending, has made for the economic climate in which we are.
But it does not end there. Jones continues to say that, “Superbond holders, U.S.-based funds GMO and Greylock, and London-based Aberdeen Standard Investments which recently rebranded as ABRDN, have formed a creditor committee and are signaling they may not restructure without IMF help.” The group reportedly met a week ago where they commented on the situation. Belize’s economic policies, the committee commented, would be more “durably addressed in the context of an IMF-supported programme.” They continued in support of IMF recommendations, stating that the proposed measures would help to close the financing gap which has forced Belize to seek refinancing on numerous occasions. Rebasing the benchmark year for economic growth to 2014 – an accounting adjustment which the IMF has estimated lifts 2020 GDP by 29% – could bring the debt ratio close to where Belize has said it would like it to be.
In March, the PUP government announced the intention to restructure the bond as part of a broader plan to restore economic sustainability and more recently, stated that they were in close consultations with the IMF over the last several months. In these consultations, they were said to have developed an adjustment program in line with IMF recommendations. Regardless, this was not enough for committee members who indicated that a Zoom conference was “unlikely to be worthwhile unless Belize agreed in advance to accept a full IMF programme.”
By all appearances, it seems that bondholders don’t have any trust in the Briceño administration to follow through on any arrangement arrived at without an IMF program.