Belize Bond Issue Jeopardized By Negative S&P Rating

Last week, the National Assembly approved the issuance of a 125 million US dollar bond - the biggest loan in Belize's history. But tonight it appears that the Government of Belize will have a hard time selling it. Government's money managers are in a scramble after international rating agency Standard and Poors downgraded Belize's ratings. The rating listed today on the Standard and Poors website for July 25th shows that Belize's local currency and foreign currency outlook has been downgraded from stable to negative. It may sound like gibberish to you, but it's the bible for the type of investors who would want to invest in the bond issue. A negative outlook is the ultimate red flag to potential investors - warning them to be wary of what is a high risk bond issue. That's bad news for GOB, which was raising the bond at 10% to pay off high interest debt. Now, to carry it through, the bond will have to be offered at higher percentage, which makes it more costly to Belize. Of course, this downgrade, coming just as Belize's biggest bond ever is about to go for a public offering, suggests more than just a coincidence and the timing would seem to indicate that larger forces are at work. Whether that's the case or not, the bottom line is that the double negative outlook will make money that government has to have, that much harder and more expensive to raise. And, while government has done all but swear that the bond money will be used for debt servicing and not for electioneering, we note that though it has been passed by the house, the agreement, which would ensure its purpose has yet to be publicly released.