UPDATE 1-Belize lays out 'superbond' restructuring options
By Mike McDonald GUATEMALA CITY, Aug 9 (Reuters) - Investors in Belize's so-called superbonds will be asked to take a haircut of up to 45 percent on the investments under restructuring options put forward by the country's government this week. Prime Minister Dean Barrow has said the small Central American country cannot afford to service the $550 million dollar bond, which started with a coupon payment of 4.25 percent but steps up this year to 8.5 percent. Restructuring options include cutting the principal to be repaid by 45 percent and extending the maturity date to 2042 from the current 2029, according to a document on the Belize central bank's website, dated Aug. 8. The interest rate on the bond, which accounts for about half Belize's government debt, would be cut to either a flat 3.5 percent throughout the term of the loan or step up from 1 percent in 2019 to 4 percent by 2042. A third option would involve extending the term to 2062, no discount on the principal, a 15-year grace period on principal payments and a flat interest rate of 2 percent. Godwin Hulse, a senior member of the government's restructuring team, said the haircut was an option given the bonds were trading below 50 cents but no final decision had been taken. "We've just posted those scenarios on the website and are reviewing some of the responses that are coming in," he said in a telephone interview. Exotix economist Stuart Culverhouse said the proposal was even more negative for bondholders than expected. "We retain our 'Sell' recommendation on Belize's super bond," he said in a research note. The yield on the bond jumped 3.5 percentage points after the announcement to 23.4 percent, according to Reuters pricing. Investors are due to receive a $25 million interest payment on the bond on Aug. 20 and Belize has said it has budgeted to make it. Asked to confirm the August payment, Hulse said: "We are going (one) step at a time ... we are having a (meeting) next week where we will discuss all the details. Next week we will have responses from bondholders and institutions."