New bond proposal presented to Belize

The government of Belize has made public its latest offer to its international creditors. The proposal involves the creation of “new bonds” that will be exchanged for existing commercial debt. Essentially the idea is to stretch out the payment schedule–to twenty-two years–and lower the interest rate–in this case four point two-five percent for the first three years, six percent for years four and five and eight point five percent until maturity in 2029. Principal will not be repaid until the last ten years of the note and at the end of the term unfulfilled interest on the original debt will be paid in full. On the surface it seems like a good deal for all concerned … but the question in this high stakes game of chicken is whether the people we owe money to believe this deal is the best they can get. Of course they are free to reject the offer and seek a better arrangement … but they run the risk of being left empty handed if Belmopan decides to throw in the towel and declare a default. On Friday there will be a special meeting of the House of Representatives to approve the offer in advance; paving the way for sale of the bonds should our creditors turn thumbs up on the deal.