Ecuador meets torn investors in frothy market

miércoles 11 de junio de 2014 18:05 GYT

* Sovereign set for bond market return

* Some predict yields below 7%

* Default memories still vivid

By Davide Scigliuzzo

NEW YORK, June 11 (IFR) - Ecuador's pending bond issue will help gauge how emerging market risk gets repriced in an increasingly frothy market, especially if the serial defaulter can get away with a yield under 7%.

The country, which defaulted on US$3.2bn of foreign debt in 2008, is meeting investors in the US and UK this week ahead of what's expected to be its first bond in close to a decade.

The deal has generated considerable interest, not least because the sub-7% yield predicted by some would be a coup for a Caa1/B/B rated sovereign with such a troubled credit history.

"In addition to a poor track record in debt repayment, Ecuador faces refinancing risks going forward," said Sarah Glendon, the lead analyst for Ecuador at Moody's.

"To the best of our knowledge, the authorities do not currently have sufficient resources to repay the bond coming due in 2015, although the government has strong willingness to repay this bond, and a successful return to the market will increase the likelihood of repayment."   Continuación...