Fitch Affirms Belize Sovereign Investments III (Cayman) Limited at 'A+'

Tue Sep 24, 2013 12:58pm EDT

CHICAGO, September 24 (Fitch) Fitch Ratings has affirmed the rating on the following notes issued by Belize Sovereign Investments III (Cayman) Limited (BSI): --$85.7 million notes at 'A+'; Outlook Stable. The notes are backed by two restructured government of Belize (GOB) sovereign obligations (underlying notes) from the country's debt restructuring in 2007. In addition, the notes benefit from two insurance policies underwritten by Steadfast Insurance Company (Steadfast) covering non-payment by the GOB. The rating of the notes addresses timely payment of interest and principal on a semi-annual basis. In August 2012, the GOB announced that it was unable to make payment on its U.S. dollar Step-Up Bonds due 2029, which include the underlying notes. After making partial payment in September 2012, the GOB entered into restructuring negotiations and came to an agreement with bondholders in March 2013. The restructuring agreement entailed a reduced interest rate and slight haircut in the face value of the underlying notes. In September 2012, in light of the GOB's partial payment, Steadfast made payment to BSI under the insurance policy and BSI made full payment of interest to the noteholders. As a result of the restructuring of the underlying notes, the trustee of BSI must submit a claim to Steadfast on each payment date for the difference between the coupon payments made by the previous underlying notes and the step-up coupon payments of the newly restructured notes. Steadfast made payment to BSI under the insurance policy in March and September 2013. The claim submission will also reflect the mismatch in principal when the transaction begins to amortize in 2019. KEY RATING DRIVERS The rating action reflects: (i) Steadfast's claim payments to the trust which guarantees timely payment of interest on the notes; and (ii) Fitch's recent affirmation of the Insurer Financial Strength Rating (IFS, 'AA-', Outlook Stable) assigned to Steadfast. RATING SENSITIVITIES The rating assigned to the notes is sensitive to Steadfast's willingness to continue making claim payments to the trust under the insurance policies. A downgrade to the IFS assigned to Steadfast could result in a downgrade to the rating of the notes. Contact: Primary Analyst Cristina Madero Associate Director +1-312-368-2080 Fitch Ratings, Inc. 70 W Madison Street Chicago, IL 60602 Secondary Analyst Cinthya Ortega +1-312-606-2373 Committee Chairperson Greg Kabance Managing Director +1-312-368-2052 Media Relations: Elizabeth Fogerty, New York, Tel: +1 (212) 908 0526, Email: elizabeth.fogerty@fitchratings.com. Additional information is available at www.fitchratings.com. Applicable Criteria andALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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