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NEW YORK, March 11 (IFR) - Pricing restrictions are forcing Ecuador to target a short maturity as it markets a new bond to international investors, said a source familiar with the situation.
The oil-exporting nation, rated B3/B+/B, is aiming to keep the coupon on the new bond sale to below 8% as it seeks to raise at least US$1bn to plug a widening budget gap caused by falling crude prices.
However, with the sovereign's 7.95% 2024s trading at a yield of closer to 9%, the country will need to pick a shorter maturity to achieve its pricing goals.
"They said that in order to stay within their coupon limit they would be willing to sacrifice (something) in terms of maturity," an investor who met with government officials this week told IFR. "I wouldn't be surprised if they come with something between five and seven years."
The sovereign placed US$2bn of the 2024s last June, marking its first international bond sale since its 2008 default. Since being priced at par, the 2024s have traded off to hit a low of 73.00 in mid-December before steadily climbing back to the 92.75 bid price seen on Wednesday.
Ecuador recently hired Citigroup to organize investor meetings in Europe and the United States ahead of the potential issue, which could come to market as soon as next week.
Government officials have already visited accounts in London and Boston and are in Los Angeles today. They will head to San Francisco on Thursday and New York on Friday. (Reporting by Davide Scigliuzzo; Editing by Paul Kilby)