Belize’s credit ratings may be cut
Saturday, June 19, 2004
NEW YORK, USA: According to Reuters,
international ratings agency Moody's on Friday said it may cut Belize's
ratings amid concerns its debts are too big for it to pay back, a move that
would raise the tiny nation's borrowing costs.
Moody's said it placed on review for a possible downgrade the foreign-currency
ceiling for Belize's bonds and notes, as well as the foreign-currency ceiling
for bank deposits and the local-currency government bond rating.
"I'm surprised to hear it," Belize Central Bank Governor Sydney Campbell told
Reuters in a telephone interview. "I can't see how the fundamental
macroeconomic situation has changed." Former
British colony Belize, a country of 250,000 inhabitants of coral quays and
jungles bordering Mexico and Guatemala, has enjoyed strong economic growth in
recent years as part of a tourism boom.
Moody's said an accompanying increase in Belize's debt burden had led to a
deterioration in the country's credit indicators.
The agency said its review of the country would assess the likelihood of a
correction in its debt ratios. Belize has two
international bonds outstanding -- a $125 million bond due in 2012 with a
coupon of 9.5 percent, and a $100 million bond with a 9.75 percent coupon due
in 2015. Campbell said the country was
considering issuing an international bond for $225 million with a maturity of
between 15 and 20 years primarily for refinancing high cost debt.
He said the government was waiting for favorable market conditions to issue
the bond. Downgrades by ratings agencies like
Moody's raise countries' borrowing costs by forcing them to offer higher
interest rates when issuing bonds to compensate for higher perceived risk.
They also limit the market for a country's bonds, as some institutional
investors are limited to buying higher graded debt.
Belize's $1 billion economy grew more than 9 percent last year.
"They are growing very quickly, but you have to take into account the size of
their economy," a Wall Street source said.
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