General — 25 February 2017 — by Adele Ramos
S&P lists Belize as “CreditWatch Negative” after missed $26 mil superbond payment

BELIZE CITY, Wed. Feb. 22, 2017–The international ratings agency, Standard and Poor’s, today listed Belize as ‘CreditWatch Negative,’ after the Government of Belize missed a coupon payment of BZ$26 million due earlier this week on its US dollar bond due in 2038.

“The Government of Belize failed to pay the US$13 million semiannual interest coupon due on Feb. 21, 2017, of its US$526.5 million bond due in 2038. The bond, which has a step-up interest rate, will begin accruing interest at 6.767% in August 2017 from the existing 5%,” the agency said.

“The government says that it will make the payment only after reaching an agreement,” S&P added.

Given the relatively high likelihood of the debt restructuring, it expects to maintain the CreditWatch as ‘negative,’ even if the government makes the payment on the coupon within the 30-day grace period, the ratings agency explained.

The government says that it will make the payment only after reaching an agreement, S&P reports

“Belize is currently in debt rescheduling discussions with the creditors of the 2038 bond. We are placing our ‘CC’ long-term foreign currency rating on Belize on CreditWatch with negative implications, reflecting our assessment that there is at least a one-in-two likelihood of a downgrade of the sovereign to selective default (‘SD’) within the next 90 days,” S&P added.

As we reported in the mid-week issue of our newspaper, if Belize fails to meet payment of the interest portion within 60 days of the due date, it could lose out on the savings it received in the last restructuring, when it got a principal haircut of about 11%.

This is the third time Belize is moving to restructure the debt. Talks with bondholders last week did not result in an agreement on the Government’s offer for debt relief through lower interest rates as well as a delay in the repayment of principal.

The Government of Belize had signaled back in November 2016 that it needed to restructure what it deems to be an unsustainable debt arrangement, in the face of financial exigencies, including an ongoing recession, problems in the financial sector due to the loss of correspondent banking relations, and losses from Hurricane Earl, which struck Belize last August.
S&P has signaled that if Belize manages to restructure the superbond, it would also lead to a credit ratings downgrade to selective default.

“We will lower our ratings to ‘SD’ if the government fails to pay the coupon payment within the stated grace period or if it completes an exchange offer or similar restructuring that we would classify as distressed,” S&P said.

S&P today affirmed the ‘CC’ long-term local currency rating, with a negative outlook. It also affirmed the ‘C’ short-term foreign and local currency ratings.


There is at least a 1-in-2 likelihood that S&P will lower the rating on Belize to “selective default” within 90 days.


Last November, S&P Global Ratings lowered its long-term foreign and local currency sovereign credit ratings on Belize to ‘CCC+’ from ‘B-’. The outlook on both long-term ratings was listed as negative.

S&P also downgraded Belize’s short-term foreign and local currency ratings to ‘C’ from ‘B’.

The last rating action came less than a week after the Government of Belize announced that it would move to renegotiate the terms of the 2038 superbond, originally issued in 2003.
The ratings agency said that it aims to resolve the CreditWatch issued today within the next three months.

“Absent payment of Belize’s interest coupon within the stated grace period of 30 days, we will downgrade Belize to ‘SD’ and the affected issue to ‘D’,” S&P said.

It added, though, that, “An exchange offer or similar restructuring that we would classify as distressed within the next three months will lead to the same rating action.”

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