Committee of Bondholders express disappointment with negations

There is breaking news room regarding the bond. The Coordinating Committee of Bondholders formed to address matters relating to the potential restructuring of Belize's U.S. Dollar Bonds Due 2029. They have expressed disappointment and concern over the Government of Belize's recently published indicative restructuring scenarios. The press release by the coordinating committee of bondholders says while they were initially encouraged by the Government's stated commitment to a "fair and transparent dialog," the Coordinating Committee is having difficulty reconciling the scenarios and the financial information released by the Government on June twentieth.

According to AJ Mediratta, a Partner at Greylock Capital Management, LLC and Co-Chair of the Coordinating Committee, "Bondholders have more questions than answers at this point," making reference to the fact that the scenarios were released despite the absence of material information necessary to evaluate the country's debt sustainability. "We previously communicated from the beginning that we are sympathetic to the challenges facing Belize and are prepared to work with the authorities in a consensual and collaborative manner. However, we do not consider the indicative scenarios released last week as the start of negotiations. This is the most organized and unified group of bondholders involved in a recent sovereign restructuring, and it is our position that we will respond to proposals that are clearly based on ability to pay using reasonable, mutually agreed assumptions as well as demonstrated burden sharing among commercial, bilateral and multilateral creditors and, importantly, the Government itself," added Mr. Mediratta.

Oppenheimer says proposed terms significantly worse for bondholders

The feedback on the bond restructuring continues to be far from welcoming. According to a recent report by Carl Ross for Oppenheimer issued on August tenth, 2012, "The the proposed terms were significantly worse than most people expected, with a major lengthening of maturities and a drastic cut in coupon levels." Ross estimate that the deal, as presented, is worth between twenty and forty cents on the dollar, depending on assumed post-restructuring yield attached to the Belize credit. The report outlines some of the events to watch and items to consider for those involved in the bonds. The key points are consistent with analysis and reports perspectives by several market analysis and commentaries.

That is indicating a rather combined consensus or dismissive reaction from the bondholders to not entertain or accept the significant losses in the scenarios of forty-five percent of the initial value of the bonds. Based on bondholders response, Oppenheimer's Carl Ross states that; "These investors see neither the need nor the urgency for the scope of NPV haircut being offered by Belize, and Belize is likely to become a financial outcast in the region as a result." Belize's current depressing macroeconomic scenario adds more complications to the huge debt obligations as questions are raised on where and how the 'reforms' stated as alternative within the 'bond restructuring scenarios' would be achieved.

The fall in foreign direct investment and the huge additional debt burden as a result of nationalizations will have an ever more negative effect on Belize's gargantuan debt burden, emphasizes Oppenheimer's analysis. What is also questioned is the lack of clarification on the allocation for the liabilities imposed by nationalizations and the amount of compensation within the restructuring bond scenarios. In other words, how and where are the monies stipulated for compensation being allocated within the restructuring scenarios? Oppenheimer states, "Belize fiasco is that the 2029 bond is not the main debt problem faced by the government…Rather the compensation that needs to be paid for the nationalizations, combined with amortizations due to multilateral and bilateral creditors, are the most onerous debt obligations over the next several years."

The report goes on to say, "the government unilaterally nationalized these companies, creating a huge contingent liability…it is difficult for bondholders to analyze this restructuring offer from the government without first knowing the size of the settlements to be paid to the former equity holders of the companies…"

The report reiterates consistently what many other reports have been stating with reference to bondholders, saying; "Belize's debt problem is as much a result of their unilateral nationalizations, as well as multilateral amortizations over the next few years, than the private sector debt. Its creditworthiness will be tarnished for a very long time as a result of this action."

Channel 5