Moody's Downgrades Belize Further Into Junk Territory

Moody's Investors Service downgraded Belize's sovereign debt rating further into junk territory, saying its government's ability to service its debt is deteriorating.

Moody's lowered the Central American country's rating to Ca from Caa1, pushing it deeper into highly speculative territory. The outlook is developing.

The rating cut is the latest in a series of downgrades this year from Moody's and Standard & Poor's Ratings Services, as both rating firms cited concerns about the possibility of another debt restructuring there.

Moody's said Belize faces weak short- to medium-term growth prospects and a questionable outlook for debt sustainability. The rating firm downgraded Belize in February, also on concerns about the country's lagging growth and debt restructuring.

The rating firm said it expects Belize will move forward with a debt restructuring plan for a $547 million "superbond," which accounts for about half the government's debt and is itself the result of a distressed debt exchange completed in 2007. The restructuring was motivated by the superbond's increased debt service costs.

The government's capacity to service its debt is expected to weaken due to declining oil-related revenues and mounting fiscal liabilities stemming from the nationalization of Belize Electricity Ltd. and Belize Telecommunications Ltd., Moody's said.

The developing outlook, Moody's said, is contingent on the government's disclosure of its debt restructuring terms.

Wall Street Journal