The “super-bond” restructuring negotiations may not have a speedy conclusion due to the “counterproductive, and adversarial actions” taken by the Government of Belize, said AJ Mediratta, the co-chair of the Bondholders Coordinating Committee.
The Committee issued a press release Tuesday, in which it expressed concern regarding several of GOB’s actions: “the release of an information package that lacked critical details, the release of restructuring scenarios prior to any substantive discussion with bondholders, and more recently the announcement by the GOB of the decision to default on its August coupon payment.”
Taking the recent actions into account, the Committee said, it considers GOB’s decisions to be inconsistent with the IMF’s good faith criterion, “which specifically addresses information transparency, early input from creditors, and the importance of efforts by borrowers to avoid default during negotiations.”
The Committee said it recognizes that Belize is facing difficult challenges, but labelled GOB’s actions as being “unnecessarily provocative,” based on the fact that the Committee has long since maintained that the restructured terms should be based on “the ability to pay using reasonable, mutually agreed assumptions, as well as demonstrated burden sharing among commercial, bilateral and multilateral creditors and … [an] agreement as to a genuine budgetary and fiscal policy framework for the country.”
In addition, the group reported that it has added new members to the Committee, and is currently representative of a majority of the bondholders. The Committee now represents some U.S$300 million of the “superbond”.
This update comes in direct contrast to Prime Minister Dean Barrow’s comment at a press conference last Wednesday, when he said Mr. Mediratta only represented a minority group of the bondholders. It is important to note, however, that prior to this week’s addition, the Committee was only comprised of bondholders who held an aggregate amount of US$200 million out of the total US$544 million bond.
The newly up-scaled committee also said that while it is currently evaluating information from GOB, including the fiscal projections, the evaluation process has been delayed because GOB has yet to provide significant information that the Committee has requested.
The release quoted BroadSpan Managing Director Mike Gerrard as saying, “The Committee submitted a detailed information request to the GOB in early June, portions of which were provided on June 20th and August 8th. However, we were told last week that GOB would provide the balance of critical items in the coming days.”
The Committee added that it hopes to conclude its analysis of the government’s fiscal projections, so it could move on to meet with GOB officials to “discuss the findings and seek to agree to a fair debt sustainability analysis (DSA) against which alternative debt structures can be assessed.”
However, that analysis process hinges on how quickly GOB can provide the requisite information. Without the full disclosure the bondholders say they would look to Last December’s IMF Article IV report, which they view as the definitive active financial analysis for Belize.
“That report did not highlight a debt sustainability concern, and the Committee is seeking to understand the key assumptions underlying Belize’s current DSA and the basis for why it differs so materially from the IMF’s analysis.”