Belize Adjusts Restructuring Offer

Following upward adjustments to Belize’s medium-term fiscal projections and a freeing up of additional resources, the government has revised the indicative debt restructuring offer it pitched in August, as it continues dialogue with holders of its 2029 Superbonds. The sovereign revised two scenarios for its par and discount bonds, it says, offering a smaller haircut, shorter maturity and higher coupons. The government now offers one scenario with no reduction in principal, a 10-year grace period, 2052 maturity, and 2.75% coupon for five years and 4.5% thereafter – altering the previous 15-year grace period, 2.0% coupon and final maturity of 2062. A second possibility entails a 33% haircut, 5-year grace period, 2042 maturity and 4.5% coupon for five years and 6.75% thereafter – altering the previous 45% haircut and 3.5% coupon. A third scenario pitched in August, also involving a 45% haircut, was not addressed. “The terms are less severe than the ones set out last August, namely, shorter grace periods, less duration extension and higher coupons. As such, there is a meaningful increase in the valuation of the [government’s] proposal, particularly in the case of the par option,” Nomura says in a report. An ad-hoc group of bondholders representing at least $200m of the debt had sent a counter proposal to the government’s initial scenarios offering three alternative scenarios based on par structures. Their three alternatives involve a return to the current 8.5% coupon upon the expiry of the reduced coupon period, required terms which include issuance of GDP warrants and oil recovery certificates, inclusion of net present value reinstatement clauses, and payment of consent fees to participating creditors. “While acknowledging that the committee’s counter proposal provides a degree of short-term cash flow relief, the government considers it to be wholly incompatible with its objective of placing the country’s debt burden on a sustainable footing,” the government says.