LATAM WRAP-LatAm bonds pressured lower in light volumes
By Paul Kilby
NEW YORK, Aug 13 (IFR) - Weaker oil prices, uncertainty about China's FX policies and a downgrade in Ecuador were all weighing on a LatAm market still suffering from light summer volumes on Thursday.
Prices on Ecuador's 10.5% 2020s continued to head south following S&P's decision on Wednesday to cut its long-term rating to B from B+.
The bond was being quoted at 89.00 on Thursday, marking a 19% drop in price since it reached a high of around 110.45 in mid May following a generously priced US$750m reopening.
As justification for the downgrade, S&P cited the government's limited ability to push through fiscal measures at a time when falling oil prices and spending cuts are causing social tensions.
Oil sales represent some 50% of the country's exports and this year's dramatic decline in crude prices has left the government struggling to raise revenues.
This week's drop in oil prices following the devaluation in China, which has supplied a good chunk of funding to Ecuador in recent years, only applied further pressure to the Andean nation's bond prices.
The country's financing requirements for 2015 stand at US$10.5bn, or 10% of GDP, with the government having already raised some US$6.3bn as of June, said S&P.
Ecuador garnered US$1.5bn of that amount through two bond sales this year, but at higher than expected cost as international investors pushed back on a credit hit by sinking oil prices. Continuación...