Belize wins 60-day reprieve after partial debt payment

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map of Belize

Debt-burdened Caribbean nation Belize has won a 60-day reprieve from bondholders after paying a portion of its overdue $23m (£14.2m) debt interest.

It paid $11.7m to creditors, earning it some breathing space and reducing the likelihood of a full-blown default.

Belize had been due to pay the $23m bond interest payment, or coupon, on 20 August, but was given a 30-day grace period in which to do so.

It missed this deadline on Wednesday.

As a result, ratings agency Standard & Poor's categorised Belize as being in "selective" default, one step below a full default.

Bondholders say they are content with the part-payment and have delayed taking legal action.

"The government's decision on the coupon payment was taken in consultation with the [bondholder] committee and we consider it a material and good faith step in the right direction," said AJ Mediratta of Greylock Capital Management, co-chair of the committee.

Struggling economy

Tourism-dependent Belize, famous for its reef-diving and fishing, is trying to renegotiate the terms of a $550m 'superbond' it is now struggling to service.

Prime Minister Dean Barrow had said his country could not afford the coupon payment and promised to renegotiate the terms of the bond when he won a second term of office in March.

The superbond represents about half the country's national debt.

But the government's suggestion that creditors consider writing off 45% of their investment was not received favourably by the bondholders.

Creditors had worried that Belize was trying to bounce them into a Greek-style debt restructuring.

The superbond is due to mature in 2029, but the government wants the term to be extended, with payments spread over 50 years. It also wants the interest rate - currently 8.5% - to be reduced to 2%.

Negotiations are continuing.

English-speaking Belize, which won independence from Britain in 1981 and has a population of just 330,000, depends heavily on tourists from Europe and the US for its income, but the global financial crisis has drastically cut visitor numbers.