Belize's creditor-friendly restructuring bought it crucial debt service relief. But the workout did little to diminish a staggeringly high debt burden.
Belize took a preemptive and transparent approach to
restructuring its $550 million external commercial debt,
setting a good example for other debtors. The sovereign workout
was also the first in more than 70 years to invoke Collective
Action Clauses (CACs) governed by New York law, now the
standard in Latin bond issues. "Belize's innovations prove that
CACs can play an important role in sovereign debt workouts,"
says Sebastian Espinosa, director in the sovereign advisory
practice of Houlihan Lokey, the sovereign's financial adviser.
Belize has $1.1 billion in public sector debt, including
bilateral and multilateral obligations not included in the
deal, which closed in February.
The CAC, which specified an 85% supermajority needed to adjust
payment terms, was embedded in a $100 million 9.75% of 2015
bond. Belize was the first Central American nation to use CACs
and the deal was issued in 2003, not long after they
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