Government of Belize $562.5 million 4.9325% sovereign bond restructuring

Overview:

• The Government of Belize has restructured its $525.5 million 6.767% bond issue due 2038.
• These bonds were issued in 2013.
• Under the new agreement the bonds will have a yield of 4.9325% and will be due in 2034.
• Citigroup Global Markets acted as consent solicitation agent.
• According to Eli Whitney Debevoise II who led the deal at Arnold & Porter Kaye Scholer, while previous restructurings have been done through an exchange offer, this deal was implemented through a consent solicitation.
• "This is, to my knowledge, the first example of a sovereign restructuring where there was a robust engagement clause in the existing documentation, and the first time that such a clause was deployed and used successfully," said Debevoise. The robust engagement clause was present in the 2013 documentation. 
• Due to the robust engagement clause, Belize was allowed to call for the formation of a committee, and committee expenses for financial and legal advisers were reimbursed. This clause allowed the negotiation to close in five months, according to information provided by Arnold & Porter Kaye Scholer.
• “Belize agreed to present a budget which called for a 3% of GDP adjustment compared to the previous year’s budget, and they assumed a commitment to target a primary surplus of 2% of GDP for the fiscal years 2018 through 2020," Debevoise said.
• The documentation included an an unwind clause if Belize does not enact a budget with a 3% GDP adjustment. 

Rani Mehta - Journalist