The Government of Belize today announced that it intends to commence discussions with holders of Belize’s U.S. Dollar Bonds due 2038 (the “2038 Bonds”) regarding the serious economic and financial challenges currently facing the country.
These challenges include low growth, rising fiscal deficits, a deteriorating balance of payments position, and declining sovereign debt indicators. Belize’s challenges have been exacerbated by slow global growth, U.S. dollar strength, Hurricane Earl, a substantial decline in key commodity production and prices, and the higher than anticipated arbitration awards.
A detailed description of the economic challenges facing Belize is contained in the International Monetary Fund’s Staff Report for the Belize 2016 Article IV Consultation published on October 27, 2016 (available here: http://www.imf.org/external/pubs/ft/scr/2016/cr16334.pdf).
Belize’s 2038 Bonds were issued in 2013 and are the only Government debt securities outstanding in the international capital markets. For a variety of reasons, Belize’s economy has significantly underperformed in comparison with the projections used at the time in setting the terms of the 2038 Bonds.
Belize intends to meet with individual bondholders or a committee representing the bondholders (if the bondholders elect to form such a committee) before the end of November to discuss measures necessary to place the 2038 Bonds on a fully sustainable basis. The Government of Belize has retained Citigroup Global Markets Inc. as its structuring advisor and Cleary Gottlieb Steen & Hamilton LLP as its legal counsel in this process.
“Any amendments to the terms of the instruments that may be agreed with holders of the Bonds will need to be implemented before the authorities submit their 2017 fiscal year budget to the Belize Parliament,” said Joseph Waight, Financial Secretary of Belize. “The budget is finalized in February of each year and then submitted for Parliamentary consideration, hence the need for an expedited creditor consultation process.”
