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The government of Belize is expecting that it will get 75% of the holders of the Superbond to agree to a consent solicitation offer by end of business  on Friday.  That would seal the deal on Superbond 3, and to hear the government tell it, it’s the deal of a decade.  

The Prime Minister and his team of financial advisors held a press conference today to lay out the details of the negotiation and the final package.  

Basically, as we’ve been reporting, the deal is that the interest rate, which was set to step up to 6.767% in August of this year, will actually step down to 4.9375%.  That alone will save Belize 36 million dollars in the next two years.  

And then, principal repayments which were supposed to start in 2019, have been pushed back for 11 years, meaning that Belize gets away from paying of 64 million US dollars per year, from 2020 to 2038.  Instead, the heavy payments are deferred until 2030, freeing up 11 years of cash flow. The Prime Minister says they had to renegotiate the bond because Belize just does not have this kind of hard currency:

Rt. Hon. Dean Barrow - Minister of Finance
"There is simply no way our foreign exchange earnings could have sustained this 64 million dollar withdrawal from the system annually from 2020 to 2038. What we've succeeded in doing now is to say there will be no amortisations paid. So for the entire life of the bond all we will pay is interest, the interest which has gone down by a sliver from the 26 million dollars a year, that's all we will pay until you get to 2030 when you suppose to pay the principal in five what they call soft bullets from 2030 through to 2034."

Mark Espat
"The bottom line is that the value, the net present value of the new bonds will be 25% or a quarter less than they are right now, that is 85 million US dollars or 170 million Belize dollars. That is the value by which the claim against Belize that these bond holders have would have been reduced. That 170 million is made up of the combination of 27% reduction in the interest rate from 6.76% to the 4.9375%. It means that between August of this year and August of 2019 when the principal repayments were to start we will pay out 40 million dollars less in that period in interest, we will pay out 53 million dollars less in interest throughout the term of the current bond compared to the new one and we will pay 600 million Belize dollars less between 2019 and 2030 in principal payments. And the weighted average life of the bonds which is very important for the bond holders will be extended in our favour from 11.8 years to 15 years. So those are the raw numbers, I think the most important one as the prime minister said just to underscore it is the savings from the principal repayments for that 11 year period to allow the economy time to grow."

Rt. Hon. Dean Barrow
"And so what you do is 2030 when the soft bullets start becoming due you merely refinance the principal. While there were times when the negotiations became tense as I indicated earlier there were never rancorous; contentious in the sense that of course you have opposition and I have opposition but it was never rancorous. I think the members of the creditor committee are those who we negotiated recognised that this was always an unsustainable deal for Belize and at while we had gone someway in terms of getting relief when we renegotiated the last time and we couldn't get any more because it was too big a swallow for them all at once - that we were coming back because it was not sustainable and it was a choice between making it sustainable or not paying. And while that was not something that we contemplated very lightly, we always knew that if that what it came to, we're going to walk away, we no di pay you. Call we mal pago, call we what you want but we no di pay."