June 21, 2011 / 9:28 PM / 8 years ago

UPDATE 1-S&P warns it may cut Belize credit rating

 NEW YORK, June 21 (Reuters) - Standard & Poor's on Tuesday
warned it may cut the sovereign credit rating for Belize,
citing the government's move to buy the country's sole
electricity provider which could hurt its credit profile.
 Belize is currently rated B by S&P, five notches below
investment grade. Moody's Investors Service has Belize one
notch lower at B3.
 The government is seeking authorization from parliament to
buy a controlling share of Belize Electricity Ltd, currently
majority owned by Canadian utility Fortis Inc, S&P said in its
statement.
 "The final details of the acquisition and its impact on the
government's debt burden and fiscal flexibility are uncertain.
However, based on the information currently available, we
believe that there is significant likelihood that we could
lower the ratings to 'B-minus' upon the conclusion of this
transaction," S&P said.
 In its statement, S&P said Belize's general government debt
as a portion of gross domestic product is already a high 85
percent, with the interest burden around 15 percent of its
revenues.
 "The proposed bill would allow the government to take over
Fortis's share, with an estimated book value of $100 million,"
S&P said, which noted Fortis holds 70 percent of the company's
equity.
 S&P said the government began to pursue a buyout when BEL's
management reported difficulties in meeting financial
obligations and covering the utility's operating costs.
 "In our view, the government is acquiring BEL to ensure the
continuity of the country's electricity supply," S&P said.
 (Reporting by Daniel Bases and Pam Niimi; Editing by Andrew
Hay)


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