BEL­MOPAN, Be­lize-Be­lize suf­fers its lat­est down­grade from Stan­dard and Poor's mov­ing deep­er in­to junk ter­ri­to­ry af­ter the Dean Bar­row ad­min­is­tra­tion an­nounced Tues­day that it can­not meet its first pay­ment on its for­eign debt. The Wash­ing­ton-based in­ter­na­tion­al rat­ing agency has low­ered its long term for­eign cur­ren­cy sov­er­eign cred­it rat­ing on Be­lize to dou­ble-C from triple-C-mi­nus.

"'We al­so low­ered our for­eign cur­ren­cy is­sue rat­ing on Be­lize's US$546.8 mil­lion bond due in 2029 to 'CC' from 'CCC-',"' S&P said in a state­ment. Be­lize was sched­uled to pay US$46 mil­lion on the ac­cu­mu­lat­ed US$544 mil­lion for­eign debt re­ferred to as the "'su­per bond"' due on Au­gust 20.

"'We sim­ply can­not af­ford this coupon pay­ment giv­en the fi­nanc­ing short­falls and oth­er chal­lenges we face,"' Prime Min­is­ter Bar­row said, adding his ad­min­is­tra­tion wants to "'move quick­ly to­ward a sen­si­ble re­struc­tur­ing of the in­stru­ment.

S&P not­ed that un­der its cri­te­ria, "'a missed pay­ment or an ex­change that we view as dis­tressed con­sti­tutes a de­fault."'

The rat­ing agency fur­ther point­ed out that Be­lize which has per capi­ta gross do­mes­tic prod­uct (GDP) of ap­prox­i­mate­ly US$4,500 had net gen­er­al gov­ern­ment debt of 68 per cent of GDP at year-end 2011 and it pro­ject­ed the coun­try's 2012 gross ex­ter­nal fi­nanc­ing re­quire­ments at $US210 mil­lion S&P warned that it will low­er Be­lize's for­eign cur­ren­cy rat­ings to 'SD' (se­lec­tive de­fault) if the gov­ern­ment miss­es its Au­gust 20 pay­ment or if it pro­pos­es a debt ex­change to in­vestors.

An 'SD' rat­ing is as­signed when Stan­dard & Poor's be­lieves that the oblig­or has se­lec­tive­ly de­fault­ed on a spe­cif­ic is­sue or class of oblig­a­tions, ex­clud­ing those that qual­i­fy as reg­u­la­to­ry cap­i­tal, but it will con­tin­ue to meet its pay­ment oblig­a­tions on oth­er is­sues or class­es of oblig­a­tions in a time­ly man­ner.

A se­lec­tive de­fault al­so in­cludes the com­ple­tion of a dis­tressed ex­change of­fer, where­by one or more fi­nan­cial oblig­a­tion is ei­ther re­pur­chased for an amount of cash or re­placed by oth­er in­stru­ments hav­ing a to­tal val­ue that is less than par

S&P, how­ev­er, said if the gov­ern­ment makes the pay­ment and for­goes debt, Be­lize's rat­ings could sta­bilise. Ear­li­er this year, Be­lize suf­fered a se­ries of down­grades from S&P and Moody's In­vestors Ser­vice which both raised con­cern about the pos­si­bil­i­ty of ad­di­tion­al debt re­struc­tur­ing by the gov­ern­ment.

CMC