Standard and Poor’s rates Belize at “selective default” after Superbond deferral

Published by [email protected] at August 12, 2020

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Posted: Wednesday, August 12, 2020. 7:57 pm CST.

By Aaron Humes: Reuters news agency reports that credit rating agency Standard and Poor’s (S&P) Global Ratings downgraded Belize’s foreign currency ratings to SD (selective default) from CC/C after details of a debt restructuring plan were announced this week.

According to S&P, an ‘SD’ rating is assigned when the agency believes a borrower has “selectively defaulted” on a specific issue or class of obligations but will keep meeting obligations on other issues or classes of obligations in a timely fashion.

S&P similarly rated Belize SD after negotiations for the second restructuring of the Superbond concluded in February of 2017.

But as noted at the end of that year’s Budget Debate by Prime Minister Dean Barrow in March, it upgraded Belize’s status to a B.

In April of this year at the height of the pandemic, Belize was rated CCC short-term and CC long-term.

Belize in July proposed to creditors that it would capitalize some scheduled payments on its $526 million Eurobond maturing in 2034, because it could not afford to meet them as it battled with the effects of the coronavirus pandemic.

Belize’s government said on Monday holders representing 82% of the outstanding debt had agreed to amendments on the terms of the bonds set out in a so-called consent solicitation statement.

Under the agreement, the interest payments due on Aug. 20, Nov. 20, and Feb. 20, 2021 will be capitalized.

Obligations to meet interest payments due after Feb. 20, 2021 will not be affected by the planned amendment.

The government said it expected conditions precedent to the effectiveness of the amendments to be met on or about Aug. 17.

Due to the amendments, Belize’s government will be required to hold a quarterly conference call to update investors on economic and financial developments in the country.

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