UPDATE 1-Ecuador targeting short maturities with new bond sale - source

miércoles 11 de marzo de 2015 18:44 GYT
 

(Adds second investor quotes, background)

By Davide Scigliuzzo

NEW YORK, March 11 (IFR) - Ecuador's determination to keep coupons below 8% is forcing it to target a short maturity as it markets a new bond offering to international investors, according to a source familiar with the situation.

The oil-exporting nation, rated B3/B+/B, hopes to raise at least US$1bn through the sale, which will help plug a widening budget gap caused by falling crude prices.

"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."

Some investors, however, would prefer the sovereign to avoid creating too many maturity spikes at the short-end of its bond curve and hence are likely to push for a longer-term bond.

"When I look at their maturity profile, I think it would make sense for them to push this to 10 or 15 year," said a second investor who met with the issuer this week.

"But the government has been very sensitive about the yield they pay and we have seen in the past that they don't want to go over 8%."

Yet with its 7.95% 2024 notes trading at a yield of around 9% on Wednesday, Ecuador might have little choice but to offer a short-dated bond to achieve its pricing goals.   Continuación...