Belize Buys Time by Making Half of $23 Million Bond Payment

Belize agreed to make about half of a missed payment on $544 million of its debt, buying time as it negotiates with creditors.

The Central American country will pay holders of a 2029 bond $11.7 million of the $23 million that they’re owed, according to statement issued today.

“This suggests Belize doesn’t want to walk away from the negotiation and cares about the public relations part of it,” Joe Kogan, the head of emerging-market debt strategy at Scotia Capital Markets, said in a phone interview from New York. “It’s a step towards building goodwill. There’s some reason to expect a better outcome than Belize offered initially.”

A day after Belize missed the payment on Aug. 20, Standard & Poor’s lowered its rating to selective default and said investors were likely to recover 30 percent to 50 percent of the bonds’ face value in a restructuring. A 30-day grace period for Belize expired yesterday.

The bond gained 0.55 cent to 34.85 cents today, the biggest advance since Aug. 27, according to data compiled by Bloomberg.

Bank of Nova Scotia (BNS) and Citigroup Inc. say the government’s proposals to restructure debt presented Aug. 8 give the securities a net present value of about 20 cents, the least among 16 sovereign debt restructurings since 1998.

“By showing good faith in paying the partial coupon, they show that they are not rogue borrowers,” Carl Ross, who covers Central America and the Caribbean as a managing director at Oppenheimer & Co. in Atlanta, said in an e-mail message before Belize’s announcement. The brokerage holds no Belize debt.

Growth Outlook

The International Monetary Fund forecasts Belize’s economy will expand 2.8 percent this year after growing 2 percent in 2011, compared with 4 percent growth for Central America.

About 35 percent of the country’s population lives in a dwelling without a flush toilet or refrigerator, according to a 2010 census.

Tourism and services accounted for 55 percent of gross domestic product in 2011. Manufacturing and construction made up 21 percent of the economy, while agriculture and fishing’s contribution fell for a sixth consecutive year, to 11 percent, according to the central bank.

To contact the reporters on this story: Adam Williams in Rio de Janeiro at awilliams111@bloomberg.net; Ye Xie in New York at yxie6@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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