More Banking Backlash On GOB Restructuring Scenarios

There is more angry reaction on the money markets to Government's so-called "Indicative Restructuring Scenarios". A UK Investment Banking Consultant called Exotix describes it thusly: "BELIZE - RESTRUCTURING PROPOSALS: WORSE THAN EVEN WE EXPECTED." They go on to explain that quote, "the proposals are even worse (for bondholders) than the fairly pessimistic scenarios we set…and are certainly worse than the market has been expecting."

The analysis notes the 46 million dollar coupon payment is due in ten days, and they say, quote, "We don't think the authorities would want to default on the coupon."

That is a matter, still unresolved, we gather - though the payment has been budgeted.

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Will bondholders take the new options?

A few bond restructuring options have been posted on the Central Bank of Belize's website. And according to a research analyst, there are default concerns. The yield on the bond in its current form, jumped three point five percentage points to twenty-three point four percent after the announcement of the three options, which suggest that bondholders lose forty-five percent of the initial value of the bond.

Brief analysis and tracking of the bond continues to indicate that the value of Belize's dollar bonds continues to fall and the default risk seems higher. Over the last month, the value of the bonds fell two point five percent and its yields climbed one hundred and forty-five basis points to twenty-point eight over the past month. The yields have climbed eight hundred and seventy-two basis points from a year ago. According to a report, the proposal is viewed as even more negative for bondholders than had been expected.

The lead negotiator for the bondholders maintains, in recent reports by Bloomberg, that they will not entertain or accept a discount on the present value of the bond. Accordingly, when the three restructuring options were released, bondholders retained their 'Sell' recommendation.

After continuous downgrades of the bonds to junk status, Moody's Investors service cut Belize's credit rating for a second time this year on June first to Ca; that's ten levels below investment grade, citing weak growth among other detrimental factors.

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