Superbond renegotiations almost over! Savings , not “new money” to spend, PM Barrow says

The Government of Belize and holders of Belize’s “superbond” have agreed on the general economic terms for a restructured bond agreement, Prime Minister Dean Barrow announced Monday afternoon at a press conference at the Biltmore Plaza Hotel.
According to Barrow, the new terms would result in cash flow savings of US$11 million for 2012, US$33 million for 2013, US $118 million for the five-year period from 2013 to 2017, and US$247 million for ten-year period of 2013 to 2022.
Flanked by members of the Belize Debt Review Team and Mr. A.J. Mediratta, of Greylock Capital and co-chair of bondholder’s Coordinating Committee, Barrow said that while he could not yet say the deal is done, they expect to have a final exchange offer in the “next week or two.”
He attributed the one- or two-week delay to a few outstanding details. “There’s a great deal of legal language that must be agreed between the two sides,” he said.
He added that the legal language is relatively significant because it will govern the entire terms affecting the new bond offerings.
Barrow also explained that he was unable to divulge any of the specifics. “We have to be careful to not run a foul of SEC [Securities Exchange Commissions—a U.S. government commission created to regulate the securities markets and protect investors] regulations; because we don’t want to give anybody an unfair leg up with respect to the trading of the bonds, I still cannot give you the full particulars of the economic terms.”
While the new terms would mean increases in cash-flow savings, Barrow was quick to point out that those savings should not be interpreted as “new money” to spend.
“These savings … will not eliminate Belize’s fiscal gap; will not completely eliminate our financing gap; but it will make that gap, in our view, entirely manageable.”
Speaking specifically to the current salary demands from the unions, especially the Belize National Teachers’ Union, which has planned a National Day of Protest for Tuesday, January 29, Barrow said it would be counter-productive to the entire renegotiation process for the government to accede to their demands at this time.
He explained that the increase that the unions are asking for would effectively add back approximately BZ$240 million to the deficit over a three-year period—a reality he described as digging a “larger hole to fill a smaller hole,” especially since the projected ‘superbond’ cash-flow savings for the next five years is approximately BZ$236 million.
Barrow also pointed out that A.J. Mediratta’s presence in Belize, and ultimately his presence at Monday’s conference, was evidence to the fact that GOB and Belize’s Debt Review Team, headed by Economic Ambassador Mark Espat, “conducted this [the restructuring] process in an exemplary good faith manner.”
He also noted that the Debt Review Team, prior to the actual launch of the terms, shall be meeting with the various social partners in an effort to review the differences between the current and the renegotiated terms.
According to Mediratta, the Coordinating Committee, which is co-chaired by Greylock Capital and a European Institution and is also comprised of a Caribbean Pension Fund and a U.S. institution, represents “just below US$200 million” of the Belize bonds, of which the co-chairs represents about two-thirds.
The broader ad hoc committee, which is representative of about 18 or 19 institutions, together with the Coordinating Committee, speaks for approximately US$350 million.
Mediratta explained that the ad hoc committee isn’t actively involved in the negotiations, but it has committed, in writing, to follow the Coordinating Committee’s recommendations.
While the two bondholder committees represent just over 60 percent of the bonds, it must be noted that the super bond’s Collective Action Clause requires 75 percent of the bondholders to accept the new terms for it to truly be final. However, Barrow said he is optimistic that they will be able to secure that amount.

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