UPDATE 1-Belize says superbond offer take-up paves way for restructuring

Fri Mar 8, 2013 8:32pm EST

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BELIZE CITY, March 8 (Reuters) - Belize's government said on Friday it had met the required threshold needed to complete a debt exchange on the country's $550 million superbond, allowing the tiny Central American nation to restructure its debt.

In a statement, the government said that holders of 86.17 percent of Belize's U.S. dollar bonds due in 2029 had agreed to swap them for new bonds due in 2038.

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

"The results of the tender process that ended today means that such an exchange of the entirety of the 2029 Bonds is expected to take place at a closing of the transaction later this month," the Belize government said in the statement.

Under the terms agreed, creditors will write off 10 percent of the value of the bonds, well below the 45 percent Belize had proposed as one of the original restructuring options.

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.

A committee representing Belize bondholders had previously said that 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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