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This morning, Belmopan Mayor Khalid Belisle, Heritage Bank's Steven Duncan, and Legacy Fund's Ervin Perez signed the Fiscal Agent Agreement for Belmopan City's first ever Municipal Bond.

Belmopan is now the second council float their own, continuing the new Belizean trend in municipal management to raise funds this way.

Mayor Belisle freely acknowledged today that he and his council drew inspiration from his Fellow UDP Mayor from Belize City, Darrell Bradley.

Khalid Belisle – Mayor, City of Belmopan
"Most definitely Major Bradley's initiative in Belize City is something we have followed closely patterns very much our offering after and he is someone I continue to lean on for advice as far as seeing this process through. As a matter of fact I have called him twice this week to pick his brain on certain parts of the bond they had executed to make sure that we have our ducks in a row here in Belmopan."

With this initiative, the City is hoping to raise 6.5 million dollars. 

Khalid Belisle – Mayor, City of Belmopan
"Our bond offering is slated to be for 6.5 million Belize dollars. I can give you a somewhat preliminary breakdown of how we are planning to spend that money. A million of it going to be devoted to repaying or paying off loan facility we have with the Holy Redeemer Credit Union so that brings us down to 5.5. We're hoping to be able to use 500 thousand dollars out of it to back purchase heavy duty equipment and vehicles for the city council that are much needed at this time so that we ourselves can do some of the maintenance work on the infrastructure in the city and not have to pay the private fees that can sometimes be a little pricey. Leaving us at 5 million and out of that 5 million we are hoping to then do some major infrastructural works in the city primarily in the area of streets and drains."

So, How will the bond be repaid?

Khalid Belisle – Mayor, City of Belmopan
"The bond is stretched out in a 14 year repayment period, that's the first point. The Belmopan City Council has been in receipt of government of Belize subvention of 50 thousand dollars a month, totalling 600 thousand dollars a year. That subvention is now going to be locked away into what is being called a sinking fund to ensure the repayment of the bond; so that 600 thousand dollars annually going into that sinking fund. In addition to that because of the fact we are retiring that million dollar loan from the HRCU which we were currently paying 14 thousand dollars a month on; in year two or a year from now we will also start transferring that same 14 thousand dollars into that same sinking fund. That will up the savings per year to 768 thousand dollars. Over the 14 year period that 768 thousand dollars more or less each year will be more than enough to cover the repayments. Interest payments are going to be due on holders on the first of February and the first of August each year."

Heritage Trust and Financial Services, a subsidiary of Heritage Bank, will be the accountants, book keepers, and ultimately, the guardians of the sinking fund which will repay the debt.

Steven Duncan – Manager, Heritage Bank
"We will be managing the sinking fund as the payments come in we will try our best to ensure the mayor does not throw it back out and that it is available to make the interest payments as on when they become due. We will be making the interest payments directly to the bond holders. We will be running the accounting for these so that they will be available; public wise it is a public issue."

To attract bondholders, the City Managers are turning to Legacy Fund as the chief marketing strategists.

Ervin Perez – Representative, Legacy Fund
"You have institutional investors like your life insurance companies who sell life policies and when you pay your premiums, these insurance companies have to invest those funds at a reasonable rate of return to ensure that they can meet the contingent liabilities if god forbid you should die before your time and they have to transfer that policy value to your beneficiaries. Well insurance companies have been having a very difficult time since 2009 when interest rates started to fall drastically in the banking system and are very challenged to invest those funds with a reasonable rate of return."

"The other primary institution investors are your pension plans. There are numerous private pension plans that have been set up by companies, utility companies as well as private companies. And finally there is a public offering, it's offered to any saver, any resident with a thousand dollars to invest and the bond has been structured in such a way that there are various maturities starting from a two year all the way to a fourteen year instrument."

Belmopan Area Rep. John Saldivar told us that he was satisfied with the final structure of the Bond.

Hon. John Saldivar – Area Representative, Belmopan
"For the bond to be approved it had to go to cabinet. As a matter of fact it still has to go to the house to be legislated and so I had to see that process through on behalf of the Belmopan City Council and behalf Belmopan City. In cabinet I had to put the arguments forward on behalf of the bond."

So, to the bottom line... The city intends to invest 5 million of that 6.5 million dollars directly in street works. The total amount needed for all infrastructure upgrades is estimated at 20 million dollars. That means that, at some point in the future, the City will need to raise more money.

Khalid Belisle – Mayor, City of Belmopan
"The estimate is that we are in a roughly 20 million dollar deficit when it comes to our infrastructural works here in Belmopan, this is only 6.5 so rough a third of that; but this is also a small part of a bigger picture for us and we continue to pursue all other avenues in terms of trying to bridge that gap."