The much battered Belize City is looking much better than it has in decades - and that's because the recently elected city Council has shown that it means business by concrete paving 14 city streets in four months.
And they want to do much more, but they've already spent over a million dollars on those streets - and so are looking to launch Belize's first every municipal bond to finance it.
The bond hopes to generate 20 million dollars - and today the formal public effort to get your support - and your dollars was launched at city hall. Here's the story:
Jules Vasquez reporting
The pitch for the City bond is based on the city's performance this far - cementing 14 streets in just four and a half months:
Mayor Darrell Bradley
"We really mean to be aggressive in terms of street construction but eventually we will run out of money. The City cannot fund this from our internal operations and the only way that we can fund this is through a bond program or some other initiative that will allow us to amortize these payments and pay them off over a period of time."
And the lure of the 20 million dollar city bond is that many, many more streets would be fixed:
Mayor Darrell Bradley
"If we are able to float this bond and make this a reality, imagine how much more we could do with 20 million dollars. What we are able to do thus far cost us between 1-2 million dollars. With 20 million dollars we could do much more and we are thinking that we will be able to do is put a significant dent in at least 50% of the streets throughout Belize City so people will be able to experience a difference."
The difference being a city that is open for business:
Mayor Darrell Bradley
"We are not building roads just to build roads sake. We want to build the road so that there could be more a fusion in the economy in Belize City and when we inject 20 million dollars in Belize City's economy that should have a stimulating effect on terms of promoting and encouraging economic development."
The bond is broken down into three offerings:
Ervin Perez, Legacy Fund - CITCO Financial Advisors
"We have recommended to the city and they have verbally agreed to issue the municipal bonds in two tranches. Tranche one being a serial issue which has two series, series 1 and series 2. Series 1 will be a principal of an amount of 3 million dollars with a two year maturity and we expect that the interest rate, the coupon rate on the bond will fall between 3.5%-4.5%. Series 2 is a 7 million, 5 years maturity bond that we expect the interest rate of the coupon rate to fall between 4.5%-5.5%. From tranche 2, has one series; series 3 which is a 10 million eight year bond and we expect the coupon rate to fall between 5.5%-7.5%."
And the city wants you to play a part - in investing in the bond; here is the pitch, first that it's a better money choice than putting it in the bank:
Mayor Darrell Bradley
"When you look at the target audience for the bond; the people who we want to market this bond for, it is financial intuitions in Belize, insurance companies, other institutional investors and even residence of Belize City. We are looking at a very small release in terms of $200 to allow even the person on the street to allow to buy into the building of Belize City."
Ervin Perez
"Each of the bond series is projected to be well above the currency in current saving rate in the commercial banks, so in terms of savings a bond holder will earn more in what they would have earned in commercial banks. Primarily now in our savings accounts - if you look in the commercial banks you have to have a minimum of $500 to earn an interest in a savings account. Currently some banks are asking for a minimum of $2,500 to earn somewhere around 2.25% of your savings. At $200 you can have a broad participation of households."
But the confidence in the bank is not the same as the confidence in City Hall - that's why certain features to protect the bond holder have been added:
Mayor Darrell Bradley
"We will pledge the most reliable of our revenues which is our government subvention and the head tax and those will be paid directly from the central government into the central bank of Belize and the central bank of Belize has already agree to act as the payment agent and so that fund over the period of 2 years, 5 years and 8 years will have within it sufficient amounts to be able to meet the interest payments and the principal payments to bond holders. So at no point will bond holders ever be at risk for non-payment."
Linsford Coleman, Dir. Projects & Research - Legacy Fund
"What we did for the second step is to program some initiatives that the city wants to undertake over the next few financial years such as the introduction of a garbage collection fee and the introduction of a property re-assessment on its tax role and when we included those it showed that the city would be able to meet its interest payments as well as payment allocation for its sinking fund provisions."
So, with fixed rates and the interest income and principal income both tax exempt - there is still political risk - what happens if and when the government changes? Bradley says he will seek a letter of comfort from the leader of the opposition.
The prospectus for the bond will be launched in mid-August.
Email
Print