And while that is a black eye for Belize tonight, there's another blow which made a direct hit. That one came this morning from New York and Boston where the committee representing holders of the Superbond rejected the offer made by Belize 5 days ago. As we told you that offer was to cut the interest rate on the Superbond from 6.75% to 4%, and to soften the bullet payments by deferring principal payments.
Well, a release from the Committee today says, quote, "its members have reviewed and decided to decline the consent solicitation...launched by the Government of Belize on January 12, 2017."
It goes unto say "the proposed amendments to the terms and conditions of the Bonds...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." End quote.
Because of this "The members of the Committee view the Consent Solicitation as premature…it will not be completed without the consent of members of the Committee, who will not provide such consent at this time… The Committee also recommends that all bondholders decline to give their consent to the terms of the Consent Solicitation at this time." So…no consent…means no deal. And we spoke with the spokesperson for the bondholders today. He is Charles Blitzer in Washington DC. Here's how he put it:...
Charles Blitzer, Bondholder Committee SPOKESPERSON
"What's being asked is a reduction in the value of the bonds compared with the value of the current bonds"
"It is unprecedented for a country to attempt to restructure the same debts three times in less than 10 years, and the committee believes that this should the final time, and what's required is a strong credible programme, which we haven't yet seen all of the necessary evidence that this would be the last time."
"But we're looking for a government programme that is strong enough and credible enough to have confidence in that the bonds won't have to be re-structured again in a few years."
"We want to be part of the solution, but we can't be the solution."
Jules Vasquez, 7News
"The offer from the government of Belize will close on the 26th, I believe. Do you expect the bondholder group to be meeting with the government?"
Charles Blitzer, Bondholder Committee SPOKESPERSON
"What happens next I wouldn't put a particular day, deadlines on that. I hope that we and the government can make progress as rapidly as possible, but we can't impose any particular deadlines on these things."
Jules Vasquez, 7News
"Well, we have a month until the next payment."
Charles Blitzer, Bondholder Committee SPOKESPERSON
"The next payment is already budgeted, it's in the existing budget which has been approved."
Jules Vasquez, 7News
"They haven't paid before. They didn't pay in August of 2013, was it? Or they made a half payment, I believe."
Charles Blitzer, Bondholder Committee SPOKESPERSON
"The money is budgeted, let me leave it at that."
The release also states, quote, "the Committee's preliminary conclusion is that the proposed adjustment program is unlikely to reduce future risks to debt sustainability or to the stability of the country's currency peg in a sufficient manner. As such, the Committee urges the GOB to seek technical assistance in further developing a comprehensive home-grown adjustment program that can ultimately be endorsed by Belize's multilateral partners." End quote.
Today in Orange Walk, the leader of the opposition told CETV-3 News that he isn't surprised at this turn of events:..
Hon. John Briceno, Leader of the Opposition
"We are not surprised that this was rejected outright by the bondholders. We knew that was going to happen because the UDP has a poor track record when it comes to keeping up with its commitments. Now, if you are bondholder and they - I've already come and tell you I can't pay, so we need to restructure. and then you restructure in good faith and then you come back again in just 3-4 years later and say I can't pay you again, so I want to restructure. Nobody is going to take you serious and that is the problem that we are finding with the government's strategy in trying to reorganized or restructure the UDP super bond."
Briceno also discussed the possibility of a GOB default - or partial default. The next Superbond payment is due in February, and in previous negotiations the Government has with-held payment as a negotiating tactic. Briceno warned against that:...
Hon. John Briceno, Leader of the Opposition
"I am very concerned that the UDP will try to play "chicken" to see who blink first; we or the bondholders. Because if we were to default there would be an immediate increase into what we owe the bondholders. It is going to go up about 11% more."
"We have to ensure that we don't default. We have to ensure that the government comes up with a credible plan."
The next payment is due on February 20. As for government, they have not issued a release or statement, but, the conventional wisdom is that this sort of back and forth, rejection leading to compromise is standard part of negotiation, especially when bondholders are being asked to give up 40% of their Net Present Value.
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