S&P downgrades Belize

S&P said it lowered the long-term foreign- and local-currency sovereign credit ratings on Belize to CC from CCC+.

The outlook is negative.

The agency also said it affirmed the country’s C short-term foreign- and local-currency ratings and lowered its transfer and convertibility (T&C) assessment to CC from CCC+.

The downgrades follow recent news that the Belize's government intends to begin discussions with holders of the sovereign's $526.5 million bonds due in 2038 about “measures necessary to place the 2038 bonds on a fully sustainable basis,” S&P explained.

The downgrades also consider an opinion that the bonds are currently highly vulnerable to non-payment, the agency said.

The government's announcement is tantamount to an intention to undertake an exchange offer or similar restructuring, which is classified by S&P as distressed even though it has not yet proposed specific details or completed the transaction.

The government made no mention of its intention to approach holders of its local-currency-denominated debt, much of which is held by public-sector institutions, the agency added.

But given that Belize has limited monetary policy and exchange-rate flexibility, S&P said its local-currency rating is the same as the foreign-currency rating.

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