Will CitCo Be Able to Make Commitment to Municipal Bondholders

Bernard Wagner

Now, before COVID 19, on a monthly basis, the council collected about three hundred thousand dollars from the head tax received from the tourism industry. But that too disappeared when the industry when into a standstill contributing to the council’s financial crunch. We asked the mayor if the council is able to meet its commitment to holders of the municipal bond. Mayor Bernard Wagner says that there will have to be some restructuring of the bond to assume the balance of the previous bond into the council.

Bernard Wagner, Belize City Mayor

“They had approved that the subvention be redirected to us. They did it for April. I believe they had promised to do it for May, June and then we begin to look at how we go forward. But clearly, the subvention is just a portion to the obligation of the bond. The significant portion was from the head tax. Remember the subvention is a hundred and twenty-five thousand per month and the head tax is in the neighbourhood of three hundred thousand monthly. So that was the bulk of the funds going into the sinking fund to Central Bank to service the previous bond. Clearly that has been compromised given that there are no cruise ships coming into the city. And so, we are looking at how we will approach these bondholders from the previous bond going forward and maybe look at putting that balance of those bonds under our municipal paper. And therefore when we are able to do that, it will reduce the interest rate and that will be some discussion because they are supposed to have interest rate in the neighbourhood of seven point five percent. Our municipal interest rate is at three point four-five percent average. So it will require negotiation with bondholders, restructuring and putting it under our municipal paper. But what that will do for the council is immediately free up those future head tax and free up the subventions so that those funds start to come into the council. And our municipal paper is structured so that we just pay interest and spin it every year. So when we look at the interest obligation for our existing municipal paper bond and the existing bond, putting it together, we could easily be able to meet those interest payments on an annual basis and it will free up the subvention to us; it would free up the head tax to us. So those are some of the areas that we are looking at and we will be going at it very aggressively with the bondholders when we get through this obviously.”