BELIZE CITY, Wed. Aug. 19, 2020– Standard and Poor’s is a credit rating agency that provides a credit score tool that is used by the world to assess the likelihood that certain entities, such as large companies, cities or countries, will repay the loans they received.
For the fifth time this year, Standard and Poor’s has downgraded Belize’s Foreign Currency LT credit rating — this time from “CC” to “SD”(selective default). This rating is given to countries that have been classed as borrowers which have “selectively defaulted” on a specific class of obligations, but will keep meeting obligations on other classes of obligations in a timely fashion.
The adjustment to the rating was made after 82 percent of holders of Government’s Superbond, which consists of bonds totaling $526 million US dollars in value that are due to mature in 2034, agreed to an amendment which has made it possible for Belize’s next three quarterly interest payments to be capitalized, which means that the unpaid interest will be added to the loan principal. Belize’s government sought the amendment in an effort to relieve excessive financial strain at a time when it is still coping with the harsh effects of the COVID-19 pandemic on the inflow of revenue/foreign exchange into the country.
The capitalization is set to take place for payment dates August 20, 2020; November 20, 2020; and February 20, 2021. After that date, GOB says, the amendments made will not have an effect on the payment arrangements that were previously in place.
S&P Global Ratings calls the move to amend the terms of the bonds “a distressed exchange offer given the nature of the request amid stressed financing conditions.”
The Government of Belize is expected to host quarterly calls to keep the investors updated on the financial condition of the country as it relates to the payment of the loan.