The "Superbond" - 7News coined the term back in 2006 - when the then Musa Administration amalgamated all their expensive commercial debt - 1 billion Belize dollars at the time - and packaged it off into a single lower interest bond offering.
Well, tonight we are happy to report that 15 years later - we'll soon be able to retire the term "Superbond" - because government is buying it all back - at a huge discount.
Now, you're probably asking what they are buying it back with - since government is so broke. Well it's a unique arrangement - called a Blue Bond - where the Washington based Nature Conservancy is basically finding the money for government to buy out the bondholders - and pay back the reduced principal at a lower interest rate over a longer period of time.
For the 572 million US dollar Superbond, which has been renegotiated twice since it was launched in 2006 - this is an end to a rocky road which will bring relief to both the broke government and the beleaguered bondholders.
First, government is buying back the bonds at a significant discount, about 55 cents on the dollar - and it will amount to a savings of a minimum of 225 million US dollars - almost half a billion Belize dollars. The interest rate on the new Blue Bond - is also expected to finish up at somewhere between 3 and 4% - whereas Government is now paying 5%. The term on the re-payment is also expected to be extended by 7 years.
So, a winning deal for Belize - hundreds of millions saved in principal and interest - but the numbers part of it doesn't tell the full story - the broad arc is that Belize is getting this deal to enhance its marine conservation efforts.
A press release says "Belize has committed, as an integral part of the transaction, to prefund in full (in the amount of $23.4 million), at settlement, a Marine Conservation Endowment Account (which)…will be devoted to supporting future marine conservation projects in Belize.
And, this is the heart of the deal - The Nature Conservancy is sourcing the funding for Belize to purchase the Bonds. It's part of a wider program called "Blue Bonds for Ocean Conservation which uses private capital to refinance public debt to support marine conservation efforts and sustainable marine-based economic activity." From what we are told, this is the largest sovereign debt restructuring ever to use this Blue Bond model.
And while it all looks good on paper - there are still two more critical steps to go. First, government - working with the Nature Conservancy - has to secure the 370 million US dollars to buy the bonds and settle all closing costs, and then they have to get 75% of the bondholders to agree to this new deal - currently about 50% have said they support it.
But, even with just the broad outline it's a major reset and a landmark accomplishment. And today at the Hose of Representatives in Belmopan, the Prime Minister said it was a long process of negotiation:
Hon. John Briceno, Prime Minister
"The first point I want to make that this had been a long drawn out process between the committee of the bondholders and the government of Belize in trying to come up with an agreement to renegotiate the superbond. This is just the first step and I must say I am very proud of our team that we worked very hard. I promised the Belizean people that we were going to find how we can renegotiate this superbond to be able to find savings and relief for the Belizean people. The second point at the moment we are still finalizing the financial aspect on how we're going to finance this transaction. We are confident that we are going to accomplish that. And the third point is that for us to consummate this deal, we must have a 75% buy in of the bondholders. Now this is the best deal that we can offer to the bondholders and it's either all in or nothing so I just want to make it very clear that we hope and expect that we could reach the 75% threshold so by doing that we can get rid of the entire super bond and come up with what we call now the blue bonds that we will be moving it from that once we do the financing and all that but I just want to reiterate that this is the best deal we can offer to the bondholders."
Reporter:
"How important is TNC in this deal?"
Hon. John Briceno, Prime Minister
"TNC, through their efforts and with credit we are working on the financing of this deal, but I'll be able to give more details, exciting things that will happen once that is consummated next week."
"Our forests is not going to be held in trust its going to be more marine conservation and it's going to be conservation beyond the reef, into our exclusive economic zone."
