Ratings agency Standard & Poor's (S&P) has lowered its foreign currency sovereign credit rating on Belize to selective default after the country failed to make a US$23-million debt payment.
The Wall Street-based firm said on Wednesday that Belize missed the coupon payment on a US$547-million bond when it came due on Monday.
"The government had previously announced that it would not pay the US$23-million interest payment due on August 20," said S&P in a statement. "We consider the failure to pay the accrued interest a default under our criteria."
S&P said the US$23 million amounts to about six per cent of government revenues and one per cent of gross domestic product for the tourism-dependent country.
"The government is in the early stage of rescheduling negotiations," the ratings firm said.
On Wednesday, Prime Minister Dean Barrow said his administration is seeking to restructure its debt through negotiations with bondholders and will consider any proposal presented.
He told reporters in Belize City that his administration has worked in "good faith" with its creditors and is willing to discuss alternative restructuring scenarios.
But he also said the government would only accept proposals that involved sustainable debt levels.
"Debt sustainability is the whole and entire object of this exercise," Barrow said. "It is clear that serious good faith, face-to-face negotiations are the only root to a con-sensual solution."
Belize's Finance Secretary Joseph Waight said the government is un-likely to pay the interest even with a 30-day grace period.
"We simply do not have the capacity to make the payment, we are hoping to engage with creditors as quickly as possible," he said.
Belize's debt restructuring team headed to Washington Thursday to seek assistance.
Barrow, who won re-election in March, said restructuring was needed after the coupon on the country's so-called superbond climbed to 8.5 per cent this year from six per cent as part of an accord reached with investors in 2007.