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Belize Seeking Lower Rates, Longer Maturity in Debt Proposal

Belize PM Dean Barrow
Belize Prime Minister Dean Barrow said "There is no reason to fear that with this massive package of debt relief, there can be any chance of Belize defaulting again." Photographer: Orlando Sierra/AFP via Getty Images

Belize’s government proposed extending maturities and cutting the interest rate on the country’s $544 million of defaulted debt as part of the Central American nation’s second debt restructuring since 2007.

Prime Minister Dean Barrow’s plan would give investors $530 million of bonds maturing in 2038 in exchange for the defaulted notes due in 2029. It would also lower the coupon to 5 percent from 8.5 percent. The proposal values the defaulted bonds at 56.75 cents on the dollar, Barrow told lawmakers in Belmopan today. Barrow said the agreement would provide the country $247 million in savings over the next 10 years.

“There is no reason to fear that with this massive package of debt relief, there can be any chance of Belize defaulting again,” Barrow said.

The defaulted bonds rallied to a one-year high of 59.54 cents on the dollar on Feb. 11 from as low as 30.11 cents after the government missed a $23 million interest payment in August. Barrow initially presented bondholders with a restructuring offer that Bank of Nova Scotia said valued them at about 20 cents.

“It’s a pretty big compromise,” Carl Ross, a managing director at Oppenheimer & Co., a brokerage firm, said in a phone interview from Atlanta. “It’s way, way more favorable to bondholders than the initial offers. Valuations based on my initial calculation are not that different from the prices of the bonds trading right now.”

Barrow’s proposal is to be voted on in the country’s legislature.

The price on Belize’s 2029 debt fell 2.4 cents to 57.14 cents on the dollar today.

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