Posted: Monday, August 24, 2020. 11:30 am CST.
By Aaron Humes: Belize is out of selective default territory per Standard and Poor’s rating agency, but only narrowly.
S&P Global Ratings on August 21 upgraded Belize’s foreign currency sovereign credit ratings to CCC+/C from SD/SD, or selective default, after what it described as “complet[ing] the restructuring of its foreign bonds.”
A supermajority of bondholders agreed to Belize capitalizing or deferring quarterly interest payments between Aug. 20 and Feb. 20, 2021.
The rating agency said it viewed the action as “a distressed debt exchange… Belize tends to default when its fiscal position and external liquidity are pressured. This is [Belize’s] fourth debt restructuring in 13 years…”
S & P cited “Belize’s constrained fiscal and external positions as well as a weak economy impacted by the coronavirus pandemic. Vulnerability to natural disasters, weak institutions and inflexible exchange rates also factor into the ratings…”
The outlook on Belize’s ratings is stable, as an expected moderate recovery in 2021 will balance out risks tied to a high debt burden and weak external liquidity, the rating agency said.
Given its fiscal weaknesses, the Belize government will only strengthen its fiscal framework in a gradual manner, it added.
S&P Global Ratings also raised Belize’s long-term local currency sovereign credit rating to CCC+ from CC and affirmed its C short-term local currency rating.
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