Creditors and Belize square off on restructuring agreement

By Paul Kilby and Christopher Spink

NEW YORK, Dec 7 (IFR) – Belize is now unlikely to reach a restructuring agreement with holders of its US$544m 2029 “superbond” after a 60-day standstill period expired with the country and its creditors still some distance apart.
Creditors last week urged Belize to reconsider their restructuring proposals, noting that they have offered US$150m-plus in debt relief over the next 10 years versus the existing 2029s and have provided the government with enough flexibility to refinance at a later stage.
This came in response to the country’s broad rejection of creditors’ counter-proposal to the sovereign’s own new plan to restructure its debt.
Belize’s revised proposal includes a 40-year par bond with no principal reduction, a mortgage-style repayment, a 10-year grace period and a coupon that pays 2.75% during the first five years and 4.5% thereafter.
Also on the table is a 30-year discount bond with a 33% principal reduction, a mortgage-style repayment, a five-year grace period and a coupon that pays 4.5% for the first five years and 6.75% thereafter.
“While these improved on the scenarios presented in August, which asked for near-unprecedented levels of debt relief, the committee believes they are not yet close to acceptable burden-sharing or Belize’s own long-term interest,” the creditor committee said in a statement.
Bondholders had said they wanted three par options to be considered that would reinstate the 8.5% coupon after 10 years, instead of Belize’s original proposal that would have delivered effective 80% net present value haircuts.
Bondholders also requested the issuance of GDP warrants and oil recovery certificates, the inclusion of a net present value “reinstatement” clause – though the governments advisers said they were not clear what that point referred to – and the payment of consent fees to creditors.
In August, the government had warned that it could not make an interest payment on existing notes after the rate stepped up from 6% to 8.5%. In September, it paid only half the US$23.5m coupon at the end of the 30-day grace period.
Meanwhile, no payment is expected when the next coupon falls due in February. Sources on both sides said it was unlikely an agreement to restructure the bonds would be reached by then.
“There is still a gap between the proposals,” said one.
“An offer is still weeks away,” said another.
The restructuring negotiations are now being conducted separately from discussions with former shareholders of Belize’s national electricity and telecoms companies, which were compulsorily nationalised between 2009 and 2011.
The government had originally wanted to roll in any compensation due to former shareholders, estimated at US$300m, with the superbond restructuring.
The creditor committee, advised by BroadSpan Capital, claims to represent 62% of bondholders by value.
Law firm Arnold & Porter has been engaged by the committee. White Oak Advisory and law firm Cleary Gottlieb are acting for the government.

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