State bankruptcy in Belize 2012

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The national bankruptcy in Belize in 2012 occurred on 20 August 2012 with the non-payment of overdue interest payments of a bond one.

Belize has been heavily indebted for many years. The national debt consisted mainly of foreign currency debts. Belize last suspended interest payments on its national debt in 2003 after a hurricane devastated the country. In mid-2011, the share of national debt in the gross national product was 85 percent. 15 percent of the state budget was used to repay debt. Standard & Poor’s awarded a credit rating of B ("Financial situation is notoriously changeable"), as did Moody’s with B3 ("Highly speculative investment. If the situation deteriorates, defaults are likely.") A classification in the area of ​​"speculative". The loan-financed nationalization of the energy supplier Belize Electricity Ltd in the summer of 2011 put an additional burden on the country's indebtedness and led to a negative outlook from the rating agencies.

On August 20, 2012, the six-month interest rate of $ 23 million on a $ 547 million bond with a term ending in 2029 was due. However, the interest was not paid, whereupon the rating agencies determined the default, i.e. national bankruptcy, and changed the rating for long-term and short-term foreign currency debt to D. Prime Minister Dean Barrow said he could not hope for a back payment of the interest in the contractually agreed one-month grace period. According to its own statements, the government saw little leeway for the upcoming negotiations with the creditors. The government aimed to cut the coupon from currently 8.5% and extend the term until 2062. With these conditions, the rescheduling would lead to considerable losses for investors. S&P expected creditors' losses of 50 to 70%, Arturo Porzecanski , finance scientist at the University of Washington even expected 80% loss.

Belize did not request support from the International Monetary Fund .

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  • Daniel Mohr: Insolvent ; FAZ of August 23, 2012, page 17
  • S&P warns it may cut Belize credit rating ; Reuters news of November 21, 2011, online
  • S&P cuts Belize rating to selective default ; Reuters news of November 21, 2011, online
  • Update - S&P cuts Belize rating to selective default ; Reuters news of November 21, 2011, online