UPDATE 2-Belize makes improved offer on 'superbond' restructuring

Thu Nov 29, 2012 5:57pm EST

BELIZE CITY Nov 29 (Reuters) - Belize improved an offer to creditors on Thursday in restructuring its $550 million "superbond" as a crucial deadline approached, but rejected counter-proposals from bondholders.

The tiny Central American country missed a $23.5 million interest payment on the sovereign bond in August but won a 60-day reprieve on legal action from bondholders after making a partial payment in September. The reprieve expires on Dec. 1.

Belize had shocked investors with suggestions they take a haircut of up to 45 percent on their investments, extend the term of the loan or accept much lower interest payments.

In a statement, the government said counter-proposals from bondholders were "unsustainable" as they all involved a return to the original 8.5 percent interest rate the country has said it cannot afford.

Instead, Belize revised its offer to include a lower haircut of 33 percent and an initial interest rate of 4.5 percent that would step up to 6.75 percent after five years - more than the 3.5 percent interest it originally proposed.

Another option involved no haircut but lower interest rates over 40 years, from 50 years originally, and a grace period of 10 years on principal repayments, from 15 years originally.

"The government of Belize will seek feedback on the revised indicative scenarios from bondholders and will remain open to discussing alternative structures that yield comparable levels of debt relief," it said in a statement posted on the central bank's website.

Scotiabank analyst Joe Kogan said improving economic growth and a lack of support from international institutions for its aggressive position had probably helped persuade Belize to soften its stance.

"Nevertheless, the primary reason was probably that the initial offer was so low that increasing it was not that much of a concession," he said in a note to clients.

Belize's bonds have the widest spread over U.S. Treasuries on the JPMorgan EMBI global index, at 2,377 basis points.

Bondholders were not immediately available to comment.

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