Bondholders reject GOB’s consent solicitation

Posted: Tuesday, January 17, 2017. 3:00 p.m. CST.

By BBN Staff: The Bondholder Committee, appointed by holders of Belize’s 2038 Bonds, has rejected government’s consent solicitation presented to holders last Thursday.According to a release from the Committee, “If approved, the proposed amendments to the terms and conditions of the Bonds contemplated by the  Consent Solicitation would crystalize a further reduction in the net present value of the Bonds in excess of 40%, in  addition to a cumulative reduction of more than 50% already provided by bondholders in restructurings of  predecessor instruments to the Bonds in 2007 and 2013.”

The Committee also said GOB’s consent solicitation was premature since any agreement requires consent from holders of at least 75 percent of the bonds. The Committee has also further advised bondholders to refrain from consenting to the terms of the consent solicitation.

Bondholders say any potential debt relief must be part a medium-term solution requiring a strong and credible program of fiscal and structural adjustment to promote economic growth and reduce crisis risk. The Committee also said there needs to be reasonable mechanisms to assure that the adjustment program will be delivered.

According to the Committee, it has not seen the details of GOB’s proposed economic adjustment program. It added that based on the publicly available information, it does not think GOB’s plan is likely to reduce future risks to debt sustainability or to the stability of the country’s currency peg. As a result, the Committee is urging GOB to seek technical assistance in further developing a comprehensive home-grown adjustment plan that can ultimately be endorsed by Belize’s multilateral partners. This is likely the bondholders’ request for Belize to enter a program of the International Monetary Fund (IMF).

The Committee said it has requested additional information from GOB regarding its intended plan and will complete its analysis then.