The Government of Belize did not make its May 20th Superbond coupon payment - and now it's asking for four months grace. A release says that it is, quote, "seeking the consent of eligible beneficial owners of Belize's U.S. Dollar Bonds...to extend the grace period applicable to the May 20, 2021 coupon to September 19, 2021...the amended grace period will expire on the same date as the grace period applicable to the next scheduled coupon, payable on August 20, 2021." End quote.
That means that, rather than just 30 days grace for today's coupon payment, Belize is asking for 122 days, and it is also asking, in advance, for a 30-day extension on the August payment - and to just consolidate two of them into one payment.
That's a lot, and don't expect bondholders to be happy with it. Yesterday, one of their representatives, Carl Ross - speaking to LOVE TV yesterday - was already complaining about Belize as a serial defaulter:
Carl Ross - Bondholder Rep. "I think it's going to be yet another default by Belize, but there is a technicality in the bond documents that says that, Belize has 30 days, there is a 30 day grace period on the coupon and so we do have a 30 day period that, you know, we're hopeful maybe the dialogue can intensifying those 30 days in those 30 days. It's not a good headline, certainly, but from a technical standpoint the default won't happen until the 30 day grace period is up."
So, as we told you, Belize wants more than those 30 days; it wants 122. In the interim, Government says it has engaged in consultations and discussions with "advisors, bondholders and other parties regarding possible alternative terms for meeting its contractual obligations under the Bonds."
As an incentive, Belize says it will pay each Eligible Holder that consents to this extension, 50 cents US for each $1,000 dollars in Securities that they hold.
That's the consent fee and bondholders have 12 days - unity June first to accept it.
It's a bold move for a government which, clearly feels it has little to lose. And one that has told bondholders, it is not going to the IMF - much to their chagrin:
Carl Ross "Another, yet, another restructuring where bondholders take big losses, ahm, is not fair unless it comes with some sort of reassurance, you know, that this time is going to be different. And, one way to provide some reassurance other than government promises, is to have an IMF program along with, you know to have IMF financing beyond the home grown program. I think we have to figure out a way if Belize is hellbent against the IMF as the Prime Minister says we have to figure out some way to receive some reassurances that if bondholders take another haircut, yet again, in addition to the many, many millions of dollars in haircuts that we've taken over the years, that this time is going to be different."
And today certainly does make it different already because while Belize has been in soft default before, it has not previously requested such a long extension on the coupon payment. We'll see what the bondholders say.
