Bond issue to refinance Gov’t debt

A release from Cabinet has confirmed that Belize is going forward with plans to float a bond issue on the international market to raise a quarter billion Belize dollars. Proceeds of the one hundred and twenty-five million U.S. dollar offering, to be managed by the U.S. firm of Bear, Sterns, will go toward refinancing the Belize government’s external debt. Servicing that rapidly increasing debt has become burdensome for government and has deprived the private sector of access to much needed foreign exchange. The refinancing, however, while providing valuable cash flow relief, will not come cheap. The fluctuating interest rate on the bonds, which is tied to the U.S. government ten year Treasury Bond, will initially run in excess of nine and a half percent, significantly higher than the average rate we now pay on the bulk of our debt portfolio. The advantage of the move is that for the first ten years of life, the bonds will only pay the interest, with the balloon payment of the entire principal due only at the end of a decade. It is projected that the refinancing measure will generate fifty-three million U.S. dollars in cash flow relief over the next nine years.