TEXT-S&P cuts Belize long-term ratings to 'CCC+'

-- There are signs that the Belizean government is becoming less willing to service its external commercial debt.

-- In addition, Belize faces external imbalances, limited access to external funding, and rising costs of servicing general government debt.

-- As a result, we have lowered our long-term foreign- and local-currency sovereign credit ratings on Belize to 'CCC+' from 'B-'.

-- The stable outlook balances the possibility that the government will seek debt relief to reduce a rising external interest burden against the possibility that debt management will improve after the election.

Feb 6 - Standard & Poor's Ratings Services said today that it lowered its long-term foreign- and local-currency sovereign credit ratings on Belize to 'CCC+' from 'B-'. The 'C' short-term credit ratings are unchanged. The outlook is stable.

"The downgrade reflects signs of lower political willingness to service Belize's external commercial debt obligations," explained Standard & Poor's credit analyst Kelli Bissett. "In addition, Belize faces external imbalances, limited access to external funding, and rising costs of servicing general government debt." On Jan. 31, 2012--during an announcement scheduling early elections for March 7, 2012--Belizean Prime Minister Dean Barrow introduced continued debt service of the government's US$546.8 million bond (known locally as the super bond) as an election issue. The nature of the statement and prominent public office of the speaker signals, from a credit perspective, lower predictability that the government will continue to service its external commercial debt. Although a future United Democratic Party (UDP) government could ultimately back away from its leader's campaign rhetoric, the injection of the superbond into the campaign follows increased policy unpredictability (including the nationalizations of Belize's main electricity and telecom companies in the last two years) and raises questions about the political commitment to timely debt service.
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