Keesha Bech

International Marketing
Case Study on the Belize Blue Bond.

Intro the background

Belize is a tiny nation in the heart of Central America, with a population of
approximately 400, 000 people. Since our Independence in 1981, we have had a series
of new governments and leaders who seem to care more for their private investments
more than growing and protecting the national economy. Since Independence, we have
seen the main revenue source shift from agriculture and fisheries in the 1980’s and
1990’s to a more tourism dependent economy in the new millennium. So, due to
financial mismanagement and corruption of successive PUDP governments, Belize
found itself in a position of failure to pay an award to the bond holders of the super bond
which was created by the Musa Administration. The Belize Blue Bond Proposal was
developed with the support of the Nature Conservancy and Credit Suise under a term
or style called Sovereign Debt restructuring. So here comes Chris Coye, Husband of
Janelle Chanona, spokesperson of Oceana Belize, and The Nature Conservancy to the
miraculous rescue.
The solution,so what is the Blue bond? According to Daniel Munevar in his article
entitled “ Making sense of the Belize Blue Bond Proposal”, the country was in financial
problems and could not meet its financial obligations to its creditors due to the Covid 19
pandemic impact on the society, health and economy of Belize. He said the Bond is
worth $546 million due in 2034 which is close to the 2030 United Nations Millennium
goal of protecting 30 % of the World’s oceans. The bond holders will be paid in cash
upon maturity of the bond. If not they got insurance from the US Development Finance
Corporation which is supposed to help Belize in the case of an unforeseen economic
disaster which would then ensure that Belize pays its bills even by force as we have
signed and are now members of the New York Arbitration Board which was a clause in
the signing of the new Blue Bond. According to Marlena Hurley of the US Development
Finance Corporation (IDFC) they have been invited in as a political risk insurance,
designed to protect investments in emerging markets such as Belize. As part of the
negotiations and agreements for the restructuring of the Belize Super Bond to the now
Belize Blue Bond, the IDFC was used as a type of insurance that protects investors
from certain risks in a host country that they the investors are not typically equipped to
protect themselves against ,such as expropriation of their assets by the government of
the host country.
The Blue Bonds unit director in Belize is Ms. Beverly Wade of the Fisheries
department and the CEO of the new Belize Blue bBnd Economy portfolio in
government is Ms. Kennedy Carillo. They are supposed to work with stakeholders but
so far we don't know much about how they are helping the local people whose livelihood
depends on the sea and tourism. According to the Amandala Newspaper, the final
settlement of this innovative and highly praised globally deal, would involve a principal
payment of .55 cents for every $1.00 owed which would secure the country a 45 %
reduction of what it currently owes bondholders.
As a marketing project, the individuals, investors, NGOs, and Government of
Belize must be commended. The success of the restructuring has been hailed as a
fantastic and excellent precedent for radical collaborations between government and
private sector investors to save the world's oceans.The Belize Blue Bond Proposal was
is to date it is the largest restructuring for marine conservation the world has ever seen
according to TNC. They said it will result in a $180 million in cash flow to Marine
conservation within the next 20 yrs. This NGO owns (privately) the Maya Forest
Reserve, The Rio Bravo forest reserve (which are thousands of acres of Belizean land)
and they say they have sea weed farms in southern Belize. When this restructuring
was approved by the new bond holders, the inclusion of a Conservation Trust was an
important part of the promise that helped the government to secure the support from
binding majority of the bondholders that imposed a 45 % haircut on the principal of the
2043 bond.
The problems with Blue Bond proposal is that it is seems to be owned and
controlled by one major player which is the United states owned, The Nature
Conservancy. It may be nice that they bought most of our debts but what will they get
from us or force us to do if we default. I suppose its a good thing that our major debts is
owned and managed by one main player instead of many. According to Daniel
Munevar, Financial Analyst, Belize’s public debt reached $US 2.1 Billion at the end of
2020. He further went on to say that domestic, multilateral and bilateral creditors
account for 73% of the debts of the country and they are excluded from participation in
a debt restructuring under the terms of the Belize Blue Bond Proposal. The losses
arising from the restructuring are entirely borne by bondholders. Belize owes
Venezuela, Taiwan, the Caribbean development Bank, Inter American Development
Bank, Central Bank of Belize among others. According to Daniel, the guidelines on how
to deal with an unforeseen climate event used is one used by the IMF for Belize which
states that the financing of the costs arising from the climate shock takes the form of
debt. Other financial firms and analysts have said that developing countries should be
provided with grants to address loss and damage after a climate event.
In conclusion, this bond restructuring was not thoroughly explained to the people
of Belize who will be the ones paying it back. According to the bond it is about
conserving the Oceanic waters in Belize. So then, this means that many local fishermen
and tour guides will have to deal with new laws and regulations that they do not
understand and that will drastically affect their livelihoods with little or no infrastructure
or safety net for their survival. If we have a natural disaster and our obligation is to our
bond holders first and then our own people, then this bond may not be such a great
thing after all. My main concern is how this will affect the local stakeholders because
according to Amandala Newspaper Belize will have to buy back bonds that it cannot
sell. It has to take care of bondholders first, the people after. Until then, we stay vigilant
and educate ourselves more on this new restructured super bond called the Belize Blue
Bond which is an international marketing masterpiece.