Moody's: Belize P.M. Suggestion of Changes to Bond Payments Is Credit Negative
SINGAPORE (Dow Jones)--Remarks last week by Belize Prime Minister Dean Barrow that his administration would seek "clear instructions" from the electorate "to do something about the superbond" are credit negative and raise concerns about another debt restructuring, Moody's Investors Service said in a report Monday.
Barrow made the comments in a national broadcast announcing plans to hold general elections on March 7, according to the ratings firm.
"The mention of a potential modification to the superbond, a $565 million bond equivalent to half of all government debt and the result of the 2007 debt restructuring, is credit negative and raises concerns about another debt restructuring," Moody's analysts Gabriel Torres and Maria Paula Carvajal wrote in the ratings firm's latest Weekly Credit Outlook.
Moody's said the country's superbond debt service has been rising due to coupon step-ups and will rise further once the debt begins amortizing in 2019, putting increasing pressure on the government's already weak finances.
Belize, which Moody's rates B3 with a stable outlook, restructured most of its debt in late 2006 and early 2007, after years of increasingly higher funding needs that peaked at the equivalent of over 20% of the country's gross domestic product in 2005, Moody's said.