Belize Successfully Closes Debt Restructuring

by Mike Godfrey, Tax-News.com, Washington

23 February 2007

The government of Belize announced this week that it has successfully closed the previously announced exchange of its commercial external debt for new bonds due in 2029.

The new bonds are denominated in US dollars and provide for step-up coupons that have been set at 4.25% per annum for the first three years after issuance.

Tenders representing 96.8% of the aggregate principal amount of the eligible claims were received into the exchange. As a result of the use of the collective action clause in one of Belize's existing bonds, the total amount covered by this financial restructuring represents 98.1% of the eligible claims.

Among the claims tendered into this exchange are two loans (in the aggregate amount of US$115.2 million) that had benefited from a third-party insurance policy, as well as a number of tenders accepted by Belize after the official tender due date of January 26, 2007.

The new US Dollar step-up coupon bonds due 2029 which Belize issued on Tuesday have a face value of US$546.8 million.

"The Government of Belize views this operation as an overwhelming success," announced Said Musa, Prime Minister and Minister of Finance of Belize, continuing: "Belize's debt repayment profile - visibly unsustainable just a few weeks ago - has now been firmly returned to a sound basis."

"Belize said at the outset that it intended to conduct this transaction in a transparent and cooperative manner," added Mark Espat, Minister of National Development. "The results of the operation demonstrate that our creditors appreciated the spirit in which we approached a difficult but nonetheless necessary task, and virtually all of them elected to support the transaction."

Last week, Moody’s Investors Service announced that it had raised Belize's credit rating from Caa3 to Caa1. Belize's Caa1 country ceiling for bonds was raised to B2, and the foreign currency country deposit ceiling of Caa3 was raised to Caa1, all with a 'stable' outlook.

Moody's said the upgrade reflected improved liquidity following the restructuring of the government's external commercial obligations, alleviating concerns about cash-flow over the next few years.

Houlihan Lokey Howard & Zukin acted as the financial advisor to the Belizean government. The Bank of New York served as exchange agent, and D F King & Co acts as the information agent.

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