PM reveals new terms for Superbond

The House of Representatives met today in Belmopan where the Prime Minister revealed the details of the newly negotiated terms for the repayment of Belize’s super bond.  The Prime Minister said the new deal makes for  a10% haircut off the top reflecting a 108 million dollar write off on the current super bond. The super bond maturity period has been extended by nine years and will be repaid in equal semiannual installments starting in August of 2019. The final maturity  is in 2038.

DEAN BARROW – Prime Minister:
vlcsnap-2013-02-12-20h04m44s150The new Bonds are expected to be issued by, not later than, 31st March, 2013.  Amortization and final maturity date: the new Bonds shall be repaid in equal semi-annual installments commencing 20th August, 2019.  The final maturity date is expected to be 20th February, 2038.  Interest payment dates: the new Bonds will pay interest semi-annual.  The first interest payment date will be approximately 5 months after the date of issuance. Thereafter, the interest payments shall be at a six months duration.

And when it comes to the interest rate, the newly negotiated rate has been reduced from the current 8.5% to 5 % per annum from the time of the launch until August of 2017. The interest will then step up to 6.7%  until February 2038, representing a 41% reduction on the newly stepped up interest rate when compared to the previous terms.

DEAN BARROW – Prime Minister:
From, and including, the 20th March, 2013, and to, but excluding, 20th August, 2017. interest at the rate of 5% per annum; and then from, and including, the 20th August, 2017, to, but excluding, the 20th February, 2038, interest at the rate of 6.767%.  

And as to the super bond holders request for value added interest instruments and GDP warrants or oil revenues to be surrendered, the Prime Minister said the Government held its ground and did not surrender to those terms.

DEAN BARROW – Prime Minister:
Belize will not issue any so-called value-added instruments.  When we first started this process, they were saying that as part of the quid pro quo for any relief to which they agreed, we would need to provide them with these so-called value-added instruments, meaning oil recovery certificates, and GDP warrants.  In other words, what they were saying is if you find oil, some of your earnings from oil will have to immediately passed on mto the Bond Holders, to make up for the relief that you’ll be getting. Similarly, if GDP grows, as it is growing under this Government, if GDP continues to grow, the Bond Holders said you will again have to make some of the additional earnings, that you realize in consequence of GDP growth, available to the Bond Holders. We resisted stoutly these suggestions, these bargaining levers, and in fact we have secured a deal in which there will be no value-added instruments, no GDP warrants, no oil recovery certificates.  

The PM said that barring any natural disasters, Belize will be able to meet its obligations under the newly negotiated terms without any need for increased taxes or retrenchment.

DEAN BARROW – Prime Minister:
Except there is some kind of natural disaster, there is no reason to feel that with this massive package of debt payment relief there can be any chance of Belize defaulting again, especially in the context of the principle repayments, will be extended to a period of 19 years instead of 10 years under the Superbond. Yearly principle repayments will be reduced from BZ$110 million starting in 2020 to BZ$56 million.   

At the start of the debate, the Opposition leader, Hon Francis Fonseca, criticized the renegotiation process saying that the Government was arrogant in its approach.

FRANCIS FONSECA – Opposition Leader:
vlcsnap-2013-02-13-06h06m00s161Mr Speaker, allow me first to record on behalf of those of us on this side of the House our very strong objections to, and disapproval of, the manner in which the Government, and the Prime Minister in particular, has managed this entire Debt Restructuring exercise. There approach has been secretive, it has been arrogant, it has been reckless, and it has been divisive. Absolutely no information, Mr Speaker, has been shared at any point during this process with any member of the opposition.  A deliberate decision by this Prime Minister to withhold information from the Opposition members of this House.  You see, Mr Speaker, the Prime Minister is yet to learn, that when he disrespects us on this side of the House, he is disrespecting half the country of Belize. And any leader, even one as arrogant as he is, who disrespects half the country and half the people in this country, is doomed to absolute failure.    

The motion was approved by the House of Representatives and goes to the Senate tomorrow for ratification. The first payment under the newly negotiated terms will be made 5 months after the date of issuance.

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