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#460840 - 03/23/13 02:25 PM BELIZE BOUNCES BACK
Marty Online   happy

Successful closure of super-bond exchange – S&P upgrades Belize

AGGREGATE FACE VALUE IS US $529.9 MILLION

“We expect that Belize will continue to face a heavy debt burden…” – Standard & Poor’s, Mar. 20, 2013

Belize Minister of Finance, Prime Minister Dean Barrow, this morning announced that the Belize debt exchange offer has now “finally, legally, conclusively closed,” marking “a final successful consummation of this long-drawn-out process.”

Barrow said that the closure took place on Wednesday, March 20, 2013, “with the submission of all the relevant legal documentation.”

He confirmed a participation rate of 86.2% of bondholders; so, he said, consistent with the Collective Action Clause in the original bond agreement, all the bonds previously due to mature in 2029 are being exchanged for the new 2038 bonds.

In a statement released via the Central Bank of Belize on Wednesday, the Belize Government announced that “Belize’s 2038 Bonds will have an aggregate face value of US $529.9 million.”

White Oak Advisory LLP acted as the financial advisor, and Cleary Gottlieb Steen & Hamilton LLP acted as the legal advisor, to the Government of Belize in this transaction, while Citibank N.A., London Branch, served as exchange agent.

Barrow also announced today that as a consequence of the successful debt restructuring, Standard and Poor’s Ratings Agency has upgraded Belize’s ratings.

According to an announcement made by Standard & Poor’s, in a statement released Wednesday, “We are raising our long- and short-term foreign and local currency issuer credit ratings on Belize to ‘B-/B’.” Belize’s last ratings were held at “SD” or selective default for both foreign and local currencies.

“We are assigning a ‘B-’ senior unsecured foreign currency rating on Belize’s new proposed bonds due in 2038,” the statement detailed.

S&P went on to project a “stable” outlook for Belize, which, it said, “reflects our expectation that the debt exchange will moderate some medium-term fiscal pressure but that the government’s debt burden will remain heavy and economic growth prospects modest.”

Prime Minister Barrow noted that the ratings “have no real relevance for us,” since the government borrows primarily on a concessionary basis.

“We expect that Belize will continue to face a heavy debt burden, absent stronger medium-term GDP growth and fiscal consolidation,” said Standard & Poor’s credit analyst Kelli Bissett.

The debt exchange will reduce Belize’s gross general government debt to 71% of GDP in 2013 from 77% in 2011, Standard & Poor’s said.

“The stable outlook on Belize reflects our expectation that the completion of the debt exchange will moderately alleviate medium-term fiscal pressure,” said Ms. Bissett. “However, the government’s debt burden will remain large, and the country’s economic growth prospects will remain affected by infrastructure and a shortage of skilled labor,” she went on to add.

Amandala


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#462199 - 04/12/13 11:01 AM Re: BELIZE BOUNCES BACK [Re: Marty]
Marty Online   happy

Ratings On Belize Raised To 'B-/B' On Expected Completion Of Debt Exchange; Outlook Stable; Bonds Due In 2038 Rated 'B-'

Over view

  • Creditors holding 86% of Belize's $547 million bonds due in 2029 have accepted the debt exchange offer, and today the Government of Belize will exchange the 2029 bonds for new bonds maturing in 2038.
  • We are raising our long- and short-term foreign and local currency issuer credit ratings on Belize to 'B-/B'.
  • We are assigning a 'B-' senior unsecured foreign currency rating on Belize's new proposed bonds due in 2038.
  • The stable outlook on Belize reflects our expectation that the debt exchange will moderate some medium-term fiscal pressure but that the government's debt burden will remain heavy and economic growth prospects modest.

Rating Action

On March 20, 2013, Standard & Poor's Ratings Services raised its long- and short-term foreign currency sovereign credit ratings on Belize to 'B-/B' from 'SD/SD'. We also raised our long- and short-term local currency sovereign credit ratings on Belize to 'B-/B' from 'CCC+/C'. The outlook is stable. At the same time, we assigned a 'B-' senior unsecured foreign currency rating on Belize's new bonds due in 2038. In addition, we affirmed our 'B-' transfer and convertibility assessment.

Rationale

We expect the Government of Belize will conclude today a debt exchange of its US$547 million bonds due in 2029 for new proposed bonds maturing in 2038, following the acceptance by creditors holding 86% of Belize's 2029 bonds. The par value of the new bonds will equate the sum of 90% of the principal of the 2029 bonds plus accrued capitalized interest arrears through March 19, 2013 on the 2029 bonds. The new bonds will begin to amortize in 2019, and their step-up interest rate will accrue at 5% from March 20, 2013 to Aug. 19, 2017, and then rise to 6.767% thereafter. Official multilateral debt and the government's domestic treasury notes and bills are excluded from this exchange offer.

We expect that Belize will continue to face a heavy debt burden, absent stronger medium-term GDP growth and fiscal consolidation. The debt exchange will reduce Belize's gross general government debt to 71% of GDP in 2013 from 77% in 2011. The debt rescheduling will moderate debt service over the medium term, lowering the general government interest burden to a projected 10% of fiscal revenues (2.5% of GDP) in 2014-2015 from 23% of revenues (6% of GDP) in 2011. Belize's medium-term growth prospects--we project 2.5% average annual growth for 2013-2015--are weaker than those of peers rated in the 'B' category.

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#462471 - 04/16/13 11:13 AM Re: BELIZE BOUNCES BACK [Re: Marty]
Marty Online   happy

Moody’s Upgrades Belize Credit Rating, Warns of “Debt Overhang”

New York-based Moody’s has upgraded the credit rating on Belize’s government bonds, the firm announced Monday.

The rating has been lifted to Caa2 from Ca, with a “stable” outlook.

The move comes after Belize restructured its $547 million “Superbond,” which is due in 2029. That included what became Belize’s second default in the last seven years.

But while Moody’s said the restructuring would provide “temporary liquidity relief,” it is “insufficient in addressing Belize’s debt overhang.”

Looking forward, a number of structural factors will keep the government’s rating in the Caa space for the next two to four years, the firm said, pointing to Belize’s track record of two defaults in seven years, something that “signals a weak institutional willingness and ability to service external debt.”

The country’s government debt remains at around 70 percent of GDP, which, coupled with “limited fiscal and foreign exchange buffers impairs the outlook for economic growth post-restructuring.”

That leaves Belize “vulnerable to shocks that could lead to an abrupt decrease in government creditworthiness.”

“There is a potential for an escalation of credit risks in the coming years. In our opinion, the government will find it progressively more difficult to maintain fiscal discipline as demand ratchets up for increased public sector wage hikes, social transfers, and capital investment,” the firm said. “Also, the debt service on the US dollar bond will escalate due to an increase in the coupon rate in 2017 and amortization payments that are set to start in 2019. Faced with rising financing needs, a pre-emptive debt restructuring could once again become an attractive alternative for policymakers, particularly in 2017, the year the next general election is set to take place.”

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