Minister says credit rating not affecting country
As we told you, this evening S&P downgraded Belize’s credit standing. According to Singh, if elected the government intends to re-negotiate the terms of the Superbond to reduce the interest. He also says that the reduced credit rating doesn’t affect Belize at this time.
“There’s a mad scramble to buy Belize bonds out there you know? I don’t know why people think that this is a tragic thing. You know how many people are rushing to buy our bonds because right now the yield—because the speculation sale price on it is lower, the yield now has gone up even higher because they will earn that percentage on the principal no matter what they purchase it for. What we’re saying is that the real yield to most of the holders now is at a high interest rate. If those people come back to the table who bought it for forty cents on the dollar or fifty cents on the dollar; they’re effectively earning sixteen, seventeen percent and we say listen let’s sit down here and get the interest rate down where you can earn a reasonable interest rate. It benefits all of us. So I don’t see why this impacts negatively on the bond holders. Even when I listen to what COLA had to say, I didn’t get a clear understanding that they understood the real dynamics of the external forces and the fact that 01:49:56 A downgrade in the credit rating doesn’t really affect us right now. Why? Because the government can’t go out and borrow on the open market; that was one of the conditions of the Superbond. Risk is balanced by investors. you have many different kinds of risk; you have country risk, you have investment risk and yet some of the riskiest countries have some of the highest possible return. Is Belize’s tourism market a risky market to venture in when it is improving right now with overnight stays etcetera? If you look at where the investments are coming into this country—is oil a risky venture if there’s a credit rating problem in Belize? I don’t see that if you look at the potential rewards. Yes, the people who are going to get the money to invest in Belize may have to get it at a higher premium because it is Belize you’re investing in, there might be a little bit of legitimacy there. But most of these people who raise these capital, raise it in other ways; not necessarily on the open market for their investment.”