Miami Law Firm Represents Island Of Belize In Bond Offering

By Susan Stabley
Considered a unique coup for a Miami law firm, attorneys with Hunton & Williams served as US counsel for the island of Belize’s recent $100 million 12-year sovereign bond offering.

Hunton & Williams is looking to represent other nation’s bond offerings, said Allen Moreland, who led the team of attorneys on the Belize deal.

With former ambassador Luis Lauredo as its president of Latin American services, Hunton & Williams is positioned to capitalize on other international business deals. Mr. Lauredo is executive director of the Americas Business Forum and related free trade ministerial meeting in November. Both events are to advance the signing of a trade accord among 34 nations in the Western Hemisphere.

Mr. Moreland called the Belize deal a mark of distinction for a Miami firm to handle the offering, something that typically falls within the realm of firms based out of New York or London. Hunton & Williams was selected over other firms because its rates were more competitive, said Sydney Campbell, deputy governor of the Central Bank in Belize.

Other members of the Belize dealmaking team were David Wells, Cecelia Homer, George Howell, Albert Hernandez and Carrie Levine.

The offering closed earlier this month, and the country has received the proceeds, said Mr. Campbell. The fixed-rate note issuance was launched in the international capital markets.

According to Belize’s ministry of finance, the notes carry a semiannual coupon of 9.75% a year and were priced at 99.132% to yield 9.875% a year.

The bond offering is unique in that it contained a collective-action clause, which allows terms of the bond to be altered by 85% of its holders rather than 100%, said Mr. Moreland.

"It makes a bond more marketable," said Mr. Moreland.

Belize joins Mexico and Brazil as countries in the Western Hemisphere that have used collective action clauses. Other nations using this type of financing include South Africa, Korea and the Ukraine.

Attorneys recommended the clause because it "gives us more flexibility down the road," said Mr. Campbell.

Belize’s total outstanding public-sector debt totaled $545 million in US dollars, according to a June 12 release from Belize’s Ministry of Finance.

This, and an earlier offering of $125 million in August, will be used to refinance debt, improve cash flow and give the small Central American country "time to stimulate economy activity," Mr. Campbell said.

A team from New York firm Thacher, Proffit & Wood that included Mr. Moreland before he joined Hunton & Williams closed the August bond offering. Both bonds were underwritten by Bear, Stearns & Co. of New York.

Standard & Poor’s Ratings Services assigned its B+ debt rating to this month’s offering and affirmed its BB- long-term local, B+ long-term foreign and B short-term currency sovereign credit ratings on Belize. The outlook on the ratings remains stable.

Where the bond offering will help improve the composition of Belize’s debt, the country remains constrained by high government debt burden, said Olga Kalinina, an associate with S&P in New York.

"It’s been high and rising due to previous expansion of fiscal policy," said Ms. Kalinina.

According to S&P, Belize’s general government deficit dropped to 5.9% of its gross domestic product in 2002 from 10.5% in 2001 and is expected to decline to 3.9% in 2003. But the general government debt grew to 63% of GDP in 2002 from 55% in 2001 and is expected to increase to 66% this year. Belize’s contingent liabilities stand at 42% of GDP and are comprised of other public sector debt, 19% of GDP, and government guarantees, 23%.

Belize’s economy posted 4% GDP growth in 2002 though economic diversification and development of the country’s tourism sector, according to Standard & Poor’s.