Sunday, August 12, 2012

BELIZE BOND SITUATION BLEAK FOR BONDHOLDERS !

BELIZE BONDS WERE TRADING AS OF AUGUST 8, 2012 AT .42 CENTS ON THE DOLLAR.  THE BONDS ARE EXPECTED TO DROP A LOT MORE.  WITH A PAYMENT OF INTEREST DUE ON AUGUST 20TH, AND THE BELIZE GOVERNMENT SAYS THEY HAVE THAT PAYMENT IN THE BANKTHE 42 CENT PRICE FOR THE BONDS IS LIKELY TO HOLD, IF THE GOVERNMENT MAKES THE INTEREST PAYMENT?  IF THE GOB DOES NOT MAKE THE PAYMENT, THEN EITHER WAY, BELIZE BONDS ARE EXPECTED TO DROP TO NEARLY ZERO, AS THE GOB HAVE INDICATED THE BELIZE BONDS ARE NOW WORTHLESSGIVEN THE OIL EXPORTS ARE DECLINING RAPIDLY, WHICH WILL TAKE OFF ABOUT $250 MILLION FROM THE GOB INCOME AND BUDGET OF ABOUT $800 MILLION.  RECENT EVENTS IN WASHINGTON AT THE TREASURY HAVE APPLIED THE KING PIN ACT IN DRUG INTRANSIT OF A MAJOR PLAYER IN THE EXPORT BANANA INDUSTRY.  ALL ASSETS BEING FROZEN, THE BANANA INDUSTRY IS EXPECTED TO EITHER COLLAPSE, OR SHRINK TO A MINOR ROLE IN GOVERNMENT REVENUES FROM EXPORTS.  IT IS REALISTIC TO PROPOSE THAT IN 2013, THE BELIZE GOVERNMENT OPERATING BUDGET WILL DROP FROM $800 MILLION TO ABOUT $450 MILLION.  FAR BELOW WHAT IS REQUIRED TO RUN CURRENT BUREAUCRATIC LEVELS.  THIS HURRICANE SEASON IS ADVERTISED AS HEAVIER THAN USUAL BY USA WEATHER FORECASTERS AND GIVEN A HURRICANE STRIKE, THE COSTS TO THE ECONOMY COULD REDUCE 2013 BUDGET LEVELS TO $375 MILLION FROM THE CURRENT $800 MILLION IT NOW ENJOYS AND FOR WHICH LOAN PAYMENTS CANNOT BE SUPPORTED.


Using an exit yield of 15%, GOB is offering  under $20 for all scenarios in "the indicative restructuring scenarios".

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