New Belize debt exchange on the cards as government seeks approval

Eight months after news first surfaced that that the government of Belize was seeking to restructure its debts, an exchange agreement with bondholders of the country's US$544mn superbond appears to have been reached. Following intense negotiations with creditors, which at one time proposed a haircut greater than that provided to Greece or Argentina, a government statement on the website of the Belize central bank confirmed that the government intends to seek approval from the national assembly for the financial terms of an offer to exchange its US dollar step-up bonds due 2029 for new US dollar bonds. The offer is expected to be launched in late February, closing in late March subject to approval from the national assembly. The new bonds will mature in 2038 with equal semi-annual principal payments commencing in August 2019. The new bonds will bear interest from March 20, 2013 through August 19, 2017 at a fixed per annum rate of 5.000%. Thereafter, the rate will increase to 6.767%, added the statement. In exchange for the 2029 bonds, creditors are set to receive new bonds "with a face value equal to the sum of (i) 90% of their holdings of the 2029 Bonds and (ii) past due and accrued but unpaid interest through 19 March 2013. Capitalized interest through 19 March 2013 will be calculated at an annual interest rate of 8.5%. Total capitalized interest will amount to 7.083% of the principal amount of the 2029 Bonds." At US$544mn, the bond accounts for 57% of the country's total external debt according to figures from the country's central bank, and 46% of outstanding external and domestic debt - it is in itself the result of a distressed debt exchange that the country completed in 2007.