More Confidence Lost: Moody's Downgrades Belize
October 26, 2005
With a debt burden which experts predict will become increasingly unmanageable in the next two years, Belize has indicated to the international community that it wishes to re-profile its entire stock of debt. And by most accounts, that's not just an option, it's a necessity. Well, it just got that much harder today when Moody's Investor Service downgraded Belize. The rating for foreign currency bonds were taken down from b3 to caa3, foreign currency deposits from caa1 to caa3, and local currency from b3 to caa3.
What does all that mean? By the reckoning of Moody's analysts, Belize's fiscal imbalances could threaten the country's economic stability it also spooks commercial creditors by judging that there is a, "heightened risk that they could experience considerable losses when Belize restructures its debt." Coming just short of warning of a default, Moody's release points to the possibility of "a disorderly restructuring of debt obligations." Local analysts point out that "disorder" is an ominous term in international banking and it could be that the only way to un-spook jumpy bankers is to enlist the IMF's support to ensure more orderly debt management.