Belize fails to make scheduled debt payment

This week, the government of Belize confirmed that it could not find US$23 million to pay creditors. This sum is part of a scheduled coupon payment of a US$544 million bond deal, due in 2029, which was negotiated prior to the financial crisis, based on substantially higher pre-crisis interest rates. Under the 2007 deal, the yield increased from 6% to 8.5% in February 2012, and Belize informed that it cannot afford to pay it.

The government of Belize is now at the early stage of negotiations with creditors, with the purpose to restructure the debt under more favourable terms. Parties must do it within a 30-day period, starting August 20, otherwise Belize will default on the bond.

Following the Belize government’s failure to pay the semiannual interest coupon, Standard & Poor’s agency lowered its long-term and short-term foreign currency sovereign credit ratings to ‘CC’ from ‘CCC’, as well as rating on Belize’s bond to ‘D’. In its turn, Moody’s Investors Service changed the outlook on Belize’s ratings from developing to negative.

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