Moody's downgrades Belize

Moody's Investors Service said it has downgraded Belize's ceilings for foreign-currency bonds to Caa3 from B3 in light of persistent concerns about external liquidity and a macroeconomic framework that is inconsistent with debt sustainability.

Moody's said it also has changed the country ceiling for foreign-currency deposits to Caa3 from Caa1. The government's local-currency rating was also downgraded to Caa3 from B3.

The outlook is stable.

The downgraded ratings reflect heightened risks that Belize will need to restructure its debt obligations in a manner that would inflict considerable losses to creditors, Moody's said.

Even under the most optimistic assumptions, Moody's said it concluded that an external funding gap could lead to a rapid reduction of foreign-exchange reserves, which might lead to a disorderly restructuring of obligations.

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