Combine sugar, butter, and honey in a small saucepan.Cook over low heat for 5 minutes; stirring constantly. Remove from heat.
Reserving 1 1/2 tbsp. coconut for garnish, blend remaining coconut, cinnamon, and nutmeg into glaze.
Remove loaf from aluminum pan. Make 4 vertical slices in loaf about 1 1/2 inches apart stopping 1/2 inch from bottom crust. Open each slice and spread 1-2 tbsp. of glaze on one side of bread. Press together. Continue until all slices are filled. Turn loaf 1/4 and make another 4 cuts as above and fill with glaze. Press loaf together and place back into pan. Spread remaining glaze over top of bread, sprinkle with reserved coconut.