The government of Belize has embarked on its second round of discussions with the investors who hold over $500 million in Belize-issued bonds. These are the folks who stand to lose money, tens of millions of it, in the country's debt restructuring process. And this group has gone out basically to tell those creditors that it is what it is, but it's not that bad.
The team is led by Economic Development Minister Mark Espat with Financial Secretary Carla Barnett and Deputy Governor of the Central Bank Marion Palacio. Since Sunday, they have held meetings in Miami, Barbados, and Trinidad - and met with over a hundred investors who hold Belize's bonds. The tour continues unto New York and then Europe.
The meetings come on the heels of Friday's IMF endorsement of Belize's debt strategy, and the publication on the Central Bank Website of an investor bulletin which outlines three scenarios for bond-holders. One is for an 18 year amortizing bond, another for a 22 year bullet bond, and the last for a 13 year amortizing bond. It's basically a_ "pick your poison special" as all three scenarios translate into losses between 30 to 35% for investors.
That disclosure has forced the Bear Stearns Investment Group to issue its own bulletin and it's not nice. It describes the terms as "highly confiscatory" and it warns that "the restructuring scenarios presented by the government are significantly worse than we expected...we are downgrading our recommendation to under perform." It urges investors to push government to give up more and keep less, saying "we have to assume that there is some flexibility that may result in somewhat better terms for creditors...but because the initial offer is so severe, we no longer view the upside as robust as we previously thought."
And while Bear Stearns' influence and impact in investor cicles is wide and far reaching, government is hoping that on its current tour its team can win the confidence of investors. In so doing, they might be quick to note that just 18 months ago Bear Stearns managed the last $146 million bond just 18 months ago - which was sold on great - and as it turns out - false promise.
