NEW YORK, Aug 12 (Reuters) – Belize reached a deal with its creditors to amend the terms of its bonds due in 2034, the government said late on Monday, triggering a Wednesday downgrade of its sovereign credit rating.
The government said holders of 82% of the outstanding bonds voted in favor of the amendment, more than the required 75% as per the collective action clauses (CAC) in the bonds’ terms.
The amendment defers and capitalizes quarterly interest payments due from Aug. 20 through Feb. 20 of next year, without affecting the bonds’ final maturity.
Having reached the CAC thresholds, all holders are bound to the amendments.
The Central American country, which is heavily dependent on tourism, launched the proposal last month. It told its creditors it could not afford the next three interest payments, partly due to the economic hit from the COVID-19 pandemic.
Standard & Poor’s on Wednesday cut Belize’s foreign currency rating to ‘selective default’ and the rating on the 2034 bond to ‘D’.
“We will consider raising the ratings once the new terms and conditions of the 2034 bonds come into effect,” S&P said in a statement.
The 2034 bond had over $526.5 million outstanding, according to Refinitiv data. (Reporting by Rodrigo Campos, Editing by Rosalba O’Brien)
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