Belize Sees Improved Ratings from Moody’s

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Updated: April 12, 2017

Another report is out from Moody’s Credit Rating Service which has given Belize an upgrade in its long-term foreign- and local-currency issuer and senior unsecured ratings to B3 from Caa2.  The report is dated April 11, 2017 and indicates that Belize has a stable outlook.  According to Moody’s, the key drivers of the upgrade of Belize’s senior unsecured and long-term issuer ratings has to do with the improvement in the government’s debt service profile and reduction in the risk of a subsequent credit event following the recent restructuring of the government’s debt.  It also has to do with the lingering macroeconomic and fiscal vulnerabilities and risks to debt sustainability which constrain Belize’s creditworthiness within the low ‘B’ category.The stable outlook reflects the balanced risks to Belize’s credit profile at the B3 rating level. The risk of a subsequent credit event remains low through the outlook horizon, given the government’s more favorable debt payment schedule. However, fiscal and economic challenges are likely to persist and Moody’s believes that, despite the liquidity relief provided by the debt restructuring, there is a low likelihood that upward pressure on Belize’s creditworthiness will develop over the next 12 to 18 months.Concurrent with today’s rating action, Moody’s has also raised Belize’s long-term foreign-currency bond ceiling to B1 from B2, and the long-term foreign-currency bank deposit ceiling to Caa1 from Caa3. The short-term foreign-currency deposit and bond ceilings remain unchanged at Not Prime (NP). Finally, the long-term local-currency bond and deposit ceilings have been raised to B1 from B2.  As was mentioned in the report, there is a low chance that this current rating would change in the near future which lends for the conclusion of Belize having a stable outlook.  The factors that could shift these ratings in either direction would be the occurrence of some event that would lead to the deterioration of external liquidity and fiscal indicators; but that would have to be a major shock to occur.  For the rating to improve even further, Belize would have to adopt extreme structural reforms that would bring greater revenues, boost in competitiveness and substantial investments.  Yesterday’s ratings came out of a meeting of the rating committee held on April 10, 2017.