Belize defaults on interest payment tries to negotiate revised payment


Prime Minister Dean Barrow has suggested that the $23 million Superbond interest payment default by the country on 20th August can be resolved through negotiations. On 14th August the government issued the following statement on its website:

The Government of Belize announced today that it is unable to make an August 20, 2012 coupon payment on the country’s U.S. Dollar Step-Up Bonds Due 2029. Belize has already commenced discussions with the holders of this bond regarding a consensual restructuring of the instrument.

“The Step-Up Bond alone represents approximately one-half of Belize’s total recorded public indebtedness”, said Dean Barrow, Prime Minister of Belize and Minister of Finance and Economic Development. “The annual interest rate on this bond stepped up earlier this year to 8.5%. We simply cannot afford this coupon payment given the financing shortfalls and other challenges we face. Our hope, however, is that we can move quickly toward a sensible restructuring of the instrument.”

Since then the government has been trying to assure investors that a restructuring of the country’s debt can settle the matter. The Belizean reports the prime minister as saying “We are certain that we can reach an agreement with the creditors. It is our sense following the comments of the principals on an almost daily basis that there is a clear recognition on the part of the creditors that debt relief for Belize is a sure thing, unavoidable and is going to happen. So we are in fact in my view only talking about degree (of debt relief).”

Belize owes $544 million in sovereign debt also known as the Belize Superbond which is due in 2029.

On hearing the news Moody’s Investor Services revised its outlook on Belize to negative from developing with its foreign currency rating on Ca, whilst Standard and Poor’s lowered its long- and short-term foreign currency sovereign credit ratings on Belize to Selective Default (SD) from CC/C.

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