Today, ( Wednesday, June 17th. 2020) the Government of Belize issued a press release with a ‘Heading’ that said “Belize Announce Request For Interest Capitalization’ To the holders of Belize’s US Dollar Bonds.
We were not aware of exactly what the term means, and we have a feeling that ‘you’ our readers are also unsure of what that term means, so we did some research in the financial world and this is what it means.
What Is Capitalized Interest?
Capitalization is the addition of unpaid interest to the principal balance of your loan. The principal balance of a loan increases when payments are postponed during periods of deferment or forbearance and unpaid interest is capitalized. As a result, more interest may accrue over the life of the loan, the monthly payment amount may be higher, or more payments may be required.
What we can tell you is that basically the letter is asking the holders of Belize’s Bonds to wait a few months for the next payment, due to the financial crisis caused by the COVID-19 Pandemic.
As is stated above in the government’s press release, Belize is due to make a payment on August 20th. That payment would normally be $25 million Belize dollars.
What Does The Request For Interest Capitalization Mean
The request to the bond-holders ( ie: investors that purchased Belize’s Bonds) is for the payment of $12.5 million U.S dollars that is due on August 20 should be deferred ; then added to the entire principal balance due, and a payment will be made at a later date, (February 2021), when the country is expected to be in a better financial position.
Additionally, In a separate financial juggling act, on Thursday June 4th. Prime Minister Dean Barrow and the Belize Central Bank presented a 30 million U.S Dollar denominated 5 year Treasury Note to buyers, each Treasury Note has a value of $50 thousand U. S dollars.
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Written & Compiled by digitalCaribbean.Live – digitalBelize.LIVE staff reporter: digitalCaribbean.LIVE@gmail.com