Skip to main content

Ecuador Said to Sell $750 Million of Five-Year Bonds at 10.5%

By Katia Porzecanski and Nathan Gill
(Bloomberg) -- Ecuador sold $750 million of five-year bonds overseas to meet its financing needs amid a plunge in the price of crude oil.

The country sold the securities to yield 10.5 percent, according to a person familiar with the matter, who isn’t authorized to speak publicly and asked not to be identified. Citigroup Inc. is managing the sale, the person said.

Ecuador, facing a funding shortfall of more than $10 billion this year, is returning to bond markets for the second time since defaulting on $3.2 billion of bonds six years ago. Borrowing costs for the nation have jumped more than a percentage point since officials began meeting with investors March 9 as oil, the nation’s biggest export, extended declines.

“The fact that Ecuador is going for it probably shows that the nation will do what it must to fund its financing needs,” Juan Lorenzo Maldonado, a Latin America economist at Credit Suisse Group AG, said by telephone from New York.

The nation’s $2 billion of dollar bonds due 2024 dropped 2.01 cents on the dollar to 86.67 cents at 12:54 p.m. in New York, pushing yields to 10.21 percent. Oil slipped 3.6 percent to $43.06 a barrel, the lowest since March 2009.

Today’s bond sale is temporarily weighing on prices for the country’s longer-maturity bonds, according to Bryan Carter, who helps manage about $360 million of emerging-market debt at Acadian Asset Management.

Cheaper Financing

“It’s causing a readjustment in the longer bonds this week, but that largely reflects the premium that comes with pushing out a shorter bond in a limited timeframe and should reverse,” Carter said in an interview from Boston. “It’s important for Ecuador to shore up its financing needs and positive that they can do it via the market.”

Ecuador decided to not sell more than $1 billion in bonds because the nation can obtain cheaper financing from other governments, Economic Policy Minister Patricio Rivera told reporters in Quito on Wednesday.

“There are other bilateral options that, in financial terms, are more interesting,” Rivera said. The government needs to be “prudent” with its funding options, he said.

While Ecuador signed $7.5 billion in loan deals with China in January, the nation hasn’t yet received any disbursements, according to Rivera.

The delay in funding “may be forcing Ecuador to resort to the market right now instead of waiting until conditions are better,” Credit Suisse’s Maldonado said.


Popular posts from this blog

Moving to the Suburbs: Reducciones in Recent Latin American Historiography

In 1503, the Spanish monarchy issued its first decree for the resettlement of indigenous groups in the Caribbean so that they would “live together” and “not remain or wander separated from each other in the backcountry.”[1]

As the European conquest spread to North, Central, and South America, these new settlements – known as reducciones and congregaciones in Spanish and descimentos in Portuguese – became sites of forced labor, evangelism, experimental agricultural, and refuge. Through a series of imperial policies decreed over the next decades and centuries of colonial rule, Spanish and Portuguese officials attempted to reshape the New World, including its human and natural landscapes. How colonial historians explain this process and indigenous peoples’ reactions to it is the focus of this essay.

In a review of the recent historiography of reducciones, several trends emerge that signal a shift in our understanding of the practice. As this paper will show, one common element is that …

77-Year-Old Wall Street Favorite to Face Fujimori in Peru Runoff

By Nathan Gill and John Quigley April 12, 2016 (Bloomberg) -- The victory by Pedro Pablo Kuczynski, a former finance minister, for second place in Sunday’s Peruvian president elections sets up a showdown between two business-friendly candidates, part of a regional backlash against left-wing politicians.
Kuczynski, a 77-year-old Oxford-trained political economist who’s spent more than 50 years championing debt control and free trade, won 21 percent of vote with 96 percent of the ballots counted, according to the electoral office. He will face Keiko Fujimori, who won 39.8 percent, in a second-round vote on June 5.
Click here to read the full story on Bloomberg News.

Bailout Risk Grows for Ecuador After Worst Earthquake in Decades

By Nathan Gill April 19, 2016 (Bloomberg) -- Before a 7.8-magnitude earthquake struck Ecuador on Saturday, the South American nation’s finances were already in tatters as the government struggled to meet payments to municipal authorities, oil companies and even cancer hospitals. Cut off from global bond markets, President Rafael Correa must now find enough money to rehouse thousands.
As volunteers continue to rescue victims from the rubble of collapsed homes and buildings on Ecuador’s Pacific coast, doubts are growing about the country’s ability to pay for the reconstruction. The nation is already in its worst recession since the financial system collapsed in the late 1990s, and international reserves are at their lowest levels in almost seven years.
Click hereto read the full story on Bloomberg News.