UPDATE 4-Belize bondholders group agrees to superbond exchange

Tue Feb 19, 2013 7:56pm EST

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By Jose Sanchez

BELIZE CITY, Feb 19 (Reuters) - A committee representing Belize bondholders said on Tuesday its members agreed to a debt exchange on the country's $550 million superbond, after almost a year of often heated negotiations.

Committee members agreed unanimously to swap their old U.S. dollar bonds for new bonds with a maturity date of 2038, the group said in a statement.

"The Committee appreciates the (Belize government's) willingness to negotiate in good faith and to adhere to what was in the end a fair and transparent process," said AJ Mediratta, joint chair of the committee and co-president of Greylock Capital Management.

Under the deal put forward by the government, creditors would write off 10 percent of the value of the bonds, far less than the 45 percent haircut Belize had proposed as one of the original restructuring options.

The maturity of the bonds will be extended by nine years to 2038. The interest rate will be set initially at 5 percent for 4.5 years and stepping up to 6.788 percent for the remaining term, a reduction from the current 8.5 percent rate.

Glenford Ysaguirre, Belize's central bank governor, said the committee represented holders of 66 percent of the superbond's value. The remaining 34 percent is held by others, who must be dealt with individually by the Belize government, he added.

The Belize government needs a 75 percent take-up rate to trigger a collective action clause, a mechanism used to restructure government bonds in a crisis.

"The new bond offer will stay open for three weeks. At that time (Belize's government) will know if it was successful in reaching the 75 percent threshold," Ysaguirre said in a statement.

The committee and another group of 20 institutional bondholders together represent creditors holding 62 percent of the outstanding debt. A spokesman for the committee said it was likely the 20 institutional investors would follow the committee's recommendation.

"The committee encourages all bondholders to consider carefully the terms of the exchange offer in making their own independent appraisal of the merits and risks of participating in the exchange offer," the statement said.

The committee said participants in the exchange would receive most favored creditor status and the principal would be protected in the event of a future default.

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