Standard & Poor’s Ratings Services downgraded Belize’s currency ratings a notch deeper into junk territory after the heavily indebted country acquired a large stake in its distressed utility company.
A growing number of Belize’s public-sector companies have exposed contingent liabilities in recent months, putting more pressure on the country’s balance sheet. The Belizean government in June added a 70% stake in Belize Electricity Ltd., bringing its total ownership to 97%.
S&P now rates Belize at B-, six steps below investment grade. Its outlook is now stable.
“We lowered the ratings to reflect Belize’s higher fiscal deficit and rising contingent liabilities,” S&P analyst Kelli Bissett said.
The credit rater cited the Central American nation’s substantial fiscal and external debt burdens even after a 2007 debt rescheduling. Weak political institutions and slow economic growth have also hurt debt metrics in Belize, which defaulted in 2006.
S&P had placed Belize’s ratings on watch in June after the government indicated it would likely acquire the 70% stake in the electricity provider from Canada-based utility Fortis Inc. (FTS.T), which had an estimated book value of $100 million.