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S&P: Belize on negative watch
S&P said it placed the CC long-term foreign-currency sovereign credit rating on Belize on CreditWatch with negative implications.
The agency also said it affirmed the CC long-term local-currency rating.
S&P also said it affirmed the C short-term foreign- and local-currency ratings, along with the transfer and convertibility (T&C) assessment at CC.
The outlook is negative.
The CreditWatch placement reflects a view that there is at least a one-in-two likelihood that the ratings will be lowered to SD within 90 days, S&P explained.
The government of Belize failed to pay the $13 million semi-annual interest coupon due on Feb. 21 on its $526.5 million bond due in 2038, the agency said.
The bond, which has a step-up interest rate, will begin accruing interest at 6.767% in August 2017 from the existing 5%, S&P added.
The terms of the bond incorporate a stated grace period of 30 days, the agency noted, and the government hopes that a final deal with the creditors will be met before the expiration of the grace period.
The government says that it will make the payment only after reaching an agreement, S&P said.
According to the agency’s rating methodology, it will lower the issuer credit rating to SD and the affected issue to D if the payment is not made within stated grace period.
Belize is currently in debt rescheduling discussions with the creditors of the 2038 bond, the agency said.
S&P said it believes the government is less likely to default on its local-currency debt and it has made no mention of its intention to restructure this debt.
However, given that Belize has limited monetary policy and exchange-rate flexibility, the agency said its local-currency rating is the same as its foreign-currency rating.
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