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Showing posts from February, 2009

Correa Says Ecuador Willing to Renew Relations With Colombia

By Nathan Gill
Feb. 27 (Bloomberg) -- Ecuador may renew diplomatic relations with Colombia if certain conditions are met, President Rafael Correa said today in a statement posted on the presidential Web site.

Correa asked Colombia to reveal all the details of an air raid last year in Ecuadorean territory, repay Ecuador for unspecified damages, support Colombian refugees in Ecuador and end an alleged “campaign” to link Correa’s government to Colombian guerillas, the statement said.

Ecuador last year withdrew its ambassador from Colombia and expelled his counterpart in Quito in the wake of a Colombian attack that killed 20 members of the Revolutionary Armed Forces of Colombia, or FARC, Colombia’s biggest guerrilla group.

Correa said today that there have been “positive signs” from Colombia but “there is much left to do,” according to the statement.

Ecuador May Seize Perenco Assets Over Tax Dispute

By Nathan Gill Feb. 26 (Bloomberg) -- Ecuadorean Oil and Mines Minister Derlis Palacios said Perenco SA has until March 3 to pay taxes or state-owned PetroEcuador will take steps to seize the French oil company’s assets.
Ecuadorean President Rafael Correa said Feb. 14 that he had given the order to begin a lawsuit against Perenco over its failure to pay taxes. Quito-based El Comercio newspaper reported in May that Perenco was disputing an increase in Ecuador’s oil windfall tax before the World Bank’s International Center for Settlement of Investment Dispute.
“The doors are open to reach an agreement with Perenco,” Palacios told reporters today in Quito. “Sadly, we have not yet received a suitable proposal.”
Perenco spokesman Paddy Spinks in London didn’t immediately return a message from Bloomberg News seeking comment. A man who answered the phone at the company’s offices in Paris after regular business hours said no one was available to comment.

Ecuador’s Borja Vows to ‘Defend’ Use of U.S. Dollar

By Nathan Gill Feb. 17 (Bloomberg) -- Ecuador’s Economic Policy Minister, Diego Borja, defended the country’s use of the U.S. dollar and said President Rafael Correa wasn’t planning to abandon the system.

“The president has been clear, we are going to defend dollarization,” Borja said today in an interview broadcast on Quito-based television station TeleAmazonas. The government won’t change its currency system because it would “strongly hit sectors with the lowest incomes,” he said.

Ecuador joined Panama and El Salvador in adopting the dollar in 2000 to help curb inflation after the sucre tumbled 73 percent against the dollar and the government defaulted on $6.5 billion of foreign debt.

Latin America economists, including Alberto Ramos at Goldman Sachs Group, Inc. in New York and Alberto Bernal, head of fixed-income research at Bulltick Securities Inc., have said that Ecuador’s use of the dollar gives Correa no outlet for providing credit to the economy as access to foreign financing dr…

Ecuador’s President Calls for Lawsuit Against Repsol, Perenco

By Nathan Gill
Feb. 14 (Bloomberg) -- Ecuador’s President Rafael Correa said today that he has given the order to begin a lawsuit against Repsol YPF SA, Spain’s largest oil company, and Perenco SA, a French oil company, over their failure to pay taxes.
Correa said during his weekly address to the nation that both companies hadn’t paid taxes on “extraordinary profits” and that he would “not respect external rulings” telling the South American country what to do.
Repsol’s spokesman in Ecuador, Federico Cruz, said today by phone from Quito that the company was “negotiating with the government” and hoped to sign a contract “very soon.”
The companies are disputing an increase in Ecuador’s oil windfall-profits tax.

Ecuador to Use Grace Period for 2030 Bond Payment

By Nathan Gill
Feb. 14 (Bloomberg) -- Ecuador will use a grace period to decide whether it will make a payment scheduled for tomorrow on its 2030 bonds, Finance Minister Maria Elsa Viteri said last night in a statement posted on the presidency’s Web site.

Ecuadorean President Rafael Correa in December halted payment on foreign bonds he calls “illegal” and “illegitimate,” putting the South American country in default for a second time in a decade.

“I know that we haven’t paid our external debt, but someone had to put the wash out to dry and say that this external debt has plundered our nation,” Correa said today in his weekly address to the nation.
Viteri said in the statement that the government is working with advisers on a “solution” for its foreign debt.
Last month, Ecuador made a payment on its 9.375 percent bond due in 2015 after invoking a 30-day grace period. The government views that bond’s legality differently than that of its notes due 2012 and 2030, Viteri said last month.

Ecuador Asks Bondholders to Identify Themselves in a Letter

By Lester Pimentel and Nathan Gill
Feb. 13 (Bloomberg) -- Ecuador is asking investors who own the country’s bonds maturing in 2012 and 2030 to identify themselves, according to a letter posted by the Emerging Markets Traders Association.

Bondholders should contact adviser Lazard Freres, according to the letter signed by Finance Minister Maria Elsa Viteri. A spokesman at Ecuador’s Finance Ministry declined to comment on the letter.

Ecuador “wishes to engage in discussions with its private creditors with a view to find appropriate solutions to its Global bonds 2012 and 2030,” Viteri wrote in the letter. Ecuador is “convinced that a better understanding of the creditor’s views and expectations can help both parties to reach a suitable solution,” the letter said.

In December, President Rafael Correa defaulted on a $30.6 million interest payment for the country’s 12 percent bonds due in 2012. Correa has said those securities, along with the country’s 10 percent bonds, are “illegal” and “illeg…

Ecuador Petroamazonas Wants $820 Million for Amazon Oil Fields

By Nathan Gill Feb. 13 (Bloomberg) -- Ecuador’s President Rafael Correa met yesterday with representatives of state-owned oil company Petroamazonas SA to discuss the $820 million needed to finance four new oil fields in the nation’s Amazon rain-forest region.

Petroamazonas is seeking joint ventures with companies including Schlumberger Ltd., the world’s largest oilfield-services provider, to extract about 69,400 barrels of oil per day from the Pakasur, Panacocha, Panayacu-Quinde, and Bloque 31 fields, according to a statement on the presidency’s Web site.

Ecuador is the smallest member of the Organization of Petroleum Exporting Countries, known as OPEC. Its current production quota is 449,000 barrels a day.

Ecuador Says IDB to Loan $500 Million for Budget Gap

By Nathan Gill Feb. 12 (Bloomberg) -- Ecuador’s Economic Policy Minister Diego Borja said the Inter-American Development Bank agreed to loan the country about $500 million to help finance a projected budget deficit.

Borja said he and Finance Minister Maria Elsa Viteri met last week in Washington with IDB President Luis Alberto Moreno to request a $500 million loan to help cover this year’s $1.5 billion projected budget deficit. He spoke to reporters today in his office in Quito.

Ecuador has also requested about $500 million from the Caracas-based Andean Finance Corporation and $480 million from the Latin American Reserve Fund, Borja said. The money would fund investment projects designed to minimize unemployment and prop up economic growth, he said.

“With the amounts we are requesting from these three organizations, the 2009 fiscal budget’s needs will be covered,” Borja said. “The road to get these resources is open.”

In addition to the loans, Ecuador’s state-run Social Security Institut…

Ecuador May Announce Bond Payment Decision Tomorrow

By Nathan Gill and Lester Pimentel Feb. 12 (Bloomberg) -- Ecuador may announce tomorrow whether it will make an interest payment on its bonds due Feb. 15, Finance Minister Maria Elsa Viteri said.
Viteri, speaking at a press conference today in Quito, said the announcement may come tomorrow or Feb. 15. Ecuador has a $134 million interest payment due on its $2.69 billion of 10 percent notes maturing in 2030, according to Royal Bank of Scotland.
“I am working all day with the debt assessors, the financial and legal advisers to give the corresponding statements and working on a definitive solution to the debt,” Viteri said. “I will make the appropriate statements at the right time. Everything depends on the latest decisions that we take between today and tomorrow.”
Should Ecuador fail to make the payment, it would be the second time the country defaults on foreign debt in the last three months. In December, President Rafael Correa skipped a $30.6 million payment for the country’s 12 perc…

Vapores Extends Decline After Warning of More Losses

By James Attwood and Nathan Gill Feb. 2 (Bloomberg) -- Cia. Sudamericana de Vapores SA fell to the lowest in six weeks on concern that losses will worsen as the global financial crisis saps shipping demand.

Latin America’s biggest container ship company slumped 2.1 percent to 411 pesos in Santiago trading, the lowest price since Dec. 22. The drop extended a five-day decline to 11 percent.

Vapores lost $38.6 million in 2008 and forecast “important” losses this year as slowing demand coincides with increased supply of vessels, according to a Jan. 30 statement. The Valparaiso, Chile-based company plans to cut services between Asia and northern Europe this quarter.
“The company was explicit with shareholders at the meeting last Friday that this would be a very bad year” and that cash flow is “very vulnerable,” Patricia Pellegrini, an analyst at Larrain Vial Corredores de Bolsa, said today by phone from Santiago.