Europe News

Concern Rises Over Belize Debt

Robin Wigglesworth, Financial Times

Belize’s bondholders have formed a creditors committee out of concern that the Central American country will become the next sovereign to default on its debts.

Global Markets

The ad hoc committee, representing holders of more than $200m of the $547m bond due in 2029, said it had been formed after the government indicated it could “amend certain terms” of the bond.

The bond has been trading at a subdued price for some time, as investors have widely expected a debt restructuring. Moody’s this month cut Belize’s credit rating for a second time this year, down to Ca, citing a likely restructuring and the country’s weak economic growth.

The bond was approved in 2007 in an effort to consolidate the country’s debt, which totals about $1bn, more than 70 per cent of Belize’s $1.4bn gross domestic product, according to the central bank.

“While we are sympathetic to the challenges facing Belize, any proposed amendment that results in a net present value or principal loss to creditors would not, based on the committee’s current understanding of the situation in Belize, be considered acceptable or, for that matter, necessary,” said AJ Mediratta, a partner at Greylock Capital Management
and chairman of the creditors committee.

Greylock Capital was one of the hedge funds that sat on Greece’s creditors committee this year.

Belize’s creditors committee is advised by BroadSpan Capital, a Latin America-focused investment banking boutique that also advised international creditors to Saint Kitts and Nevis, the Caribbean island federation, in debt restructuring this year.

Dean Barrow, Belize’s prime minister, said last week that the government’s debt restructuring team had met officials from the International Monetary Fund and the Inter-American Development Bank and feedback had been positive.

“In the case of the IDB, we’re also asking them to partially guarantee the restructured bonds and those conversations, as I understand it, went well, very well indeed,” he told reporters, according to Reuters.

“It’s important to get the IDB and the IMF on board, number one, so that the figures we put out to the bondholders can be certified as being real and legitimate.”