Thursday, September 20, 2012



  A report has come in, that the Government of Belize made a payment on the owed Bonds before close of trading on the 20th.  The guess is:  that the amount was what they were negotiating.  My guess is about 32% or so?  The reduced amount required by government.

  The Belize government wishes to issue a new SUPERBOND 2 replacement, which would provide the haircut and reduce the interest rate.  The new SUPERBOND 2 is to include the $300 million for the acquisition by nationalization of BTL and BEL payouts.  Apparently the sticking point in the negotiations is the increase in the SUPERBOND 2 size to include this extra debt, with existing bond holders.  Belize is between a rock and a hard place.  In order to stay in the BOND game, we have to get the new issue of BONDS down both in size of debt and in interest rates.  There is no way in hell the economy of Belize can pay it's debts.  We have over 100% debt to GDP. Partial fault comes from predatory foreign lenders, who gambled on skimming the Belize economy of foreign exchange currency as we earned it.  The lenders have lost the gamble, and whether or not they settle on new terms is a moot point, as if they don't, it will become a real default and their paper bonds can be used as toilet paper. The Belize government is trying to stay in the game.  I'm doubting they can, if they are offering a .32 cents on the dollar.  Way too high!
  The Belize government doesn't want that and besides that, they are having some real statistics on the economy these days, when back in the time of the original bonds, there was none.  Nothing but bureaucratic guesswork.  Sadly overestimated to please politicans and thus keep their jobs. Statistics today on the economy are improving and better projections are being made, at least in the realm of finance.  This current UDP government have built on previous work and the statistical management of the economy is gradually becoming more realistic and factual.  It is not perfect yet by any means, but we can now project a few years into the future. We still don't have clerks can do data entry, for most government departments and extracting data from paper files is not worth the labor intensive effort.  So the bureaucrats guess!
  Debt peonage is at least 300 years old and practised all over the world today.  Belize is in debt peonage to a usury system of banking.  The OECD countries for us, control the transfer of money payments in Exchanges.  I think ours are done in Belgium and New York?  I don't know how you can break out of DEBT PEONAGE.  The KINGS of olden times simply KILLED the lenders to the monarchy and seized their properties.  Banks and bonds were more risky then. Now you just risk your speculative buying of third world bonds in the emerging market.  Most buyers of such bonds make sure to diversify their holdings and nobody holding Belize Bonds have any large percentage at risk.  The add on costs are astronomical and increase the cost.  Unlike the Prime Minister, myself, I would just default.  A trader in bonds and stocks takes the risks on his or her gamble and loses the bet when wrong.  This one, the bondholders are wrong on their bet.  I admire the Prime Minister for trying to see that bond holders can in theory, get some of their investment back.  Maybe they can sell those bonds at a future date?  I think the PM is right, ethically; but as a trader myself of Jaguar Capital Management, in short term OPTION trading, I'm more accustomed to just taking the loss, when I guessed wrong and missed the market direction forecast.  My trading philosphy is to cut your losses quick and I believe it would be a stupid bond trader that thought he was going to get ANY return on these bonds worth talking about.  Somebody will buy then for sure, if they are being traded.  Probably end up being traded in many more small lots at a new lower price range. The original holders should get out and cut their losses quick, while they can.
  I still think .32 cents on the dollar is too high, by my back of the envelope gut feeling calculations.  That debt value  has to get down to 5 cents or lower.  I'm interested, but those bonds are going to have to get down to between 1 and 2 cents to interest me here in Belize.  The interest payment would have to be extremely high as compared to the buying of the bonds on secondary markets, to make them attractive. Certainly no one, would expect the new SUPERBOND 2, would last more than 10 years in the current restructuring terms.  It would be throwing your money away and just gambling that the price you pay for them, can be returned in 8 or 10 years by the interest payments.  Belize does not have the political management governing system, to successfully keep the country out of future debt sink holes as the politicians change. The controls on future borrowing are just not in the laws.  Politicians are looking to get rich quick in 5 year terms. I think the Belize government is still offering way too high, for restructuring.  The extended long term nature of the bonds, which if bondholders want to get back 100% of initial capital is too long for me. Even at a haircut on the price of 70%.  The interest rate is not competitive with other forms of gambling speculation in bonds, stocks, options and futures for example.


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