Ecuador could pay bonds, make history

viernes 6 de febrero de 2015 15:39 GYT

By Davide Scigliuzzo

NEW YORK, Feb 6 (IFR) - Ecuador bonds have defied the slump in oil prices with a solid rebound, and this year the sovereign could pay principal on one of its maturing global issues for the first time ever.

The turnabout is nothing short of remarkable for a country that underwent a selective default just six years ago, and has investors feeling bullish about its ability to withstand the oil shock, at least in the short term.

Ecuador bonds are already among the best-performing sovereign issues in the EM universe, up 7.1% so far this year compared with a 1.4% gain for the JP Morgan EMBI Global Diversified index.

In a region where fellow oil producer Venezuela has seen its bonds lose more than 10% in just a matter of weeks and over 45% in the last six months, hopes are running high that Ecuador will soon be able to put its rocky history in the capital markets safely behind it.

"The government has been trying very hard to prove their willingness to pay," said Sarah Glendon, sovereign economist at Gramercy.

"This is why repaying the 2015 bond is very symbolic for the government and the market."

Ecuador has defaulted on every Global bond it has issued since debuting in the international markets in 1997 - but its US$650m 9.375% maturing in December could mark the turning point.

The note was the only one spared by President Rafael Correa when he opted in 2008 to default on the sovereign's 2012s and 2030s, even though it had enough funds to service the debt.   Continuación...