Global Investment Banking and Securities Firm signals Lights Out for Belize

Last week’s nationalization of B.E.L. is being closely monitored internationally.  Standard and Poor’s was the first to send out distress signals threatening to lower Belize’s credit rating. Today, we came across a report from one of the largest global investment banking and securities firms, Nomura, which is also predicting ominous prospects for Belize. The article is contained in the Country Views for the Americas and is written by Flora Hsu and Boris Segura, two financial strategists. In the report entitled Belize: Lights Out, the writers describe B.E.L.’s situation are more troublesome than a mere corporate bankruptcy because of its relations with a number of suppliers; BELCOGEN being one of them, whose survival is tied to B.E.L. Hsu and Segura place Fortis share in B.E.L. at a book value of approximately one hundred million US dollars. Now that the company has been acquired by the government, there is a significant debt burden because of B.E.L.’s long term debts and cost of operations and the government may find itself paying a running subsidy to keep the lights on. After crunching the numbers, the writers find that with a fiscal deficit of around thirty million US dollars, and a negative two point five of G.D.P., the debt burden of B.E.L., amounts to twenty-seven percent of the deficit. Country Views also predicts that there are weak prospects for foreign direct investment. It concludes then that the negative effects on Belize’s fiscal accounts and investment climate should not be taken lightly. The full report can be viewed at www.nomura.com/research.