The country risk of Ecuador remained at 1,839 points until this Sunday, October 15, when the new president of the Republic was elected. A high indicator that still does not reflect the election result. However, the triumph of Daniel Nobo Azín in the presidential elections alone could not significantly reduce the country’s risk, which, on the other hand, did decrease when it was known about the electoral victory of Guillermo Lasso in the previous presidential elections.

Country risk, measured by investment bank JP Morgan and published by the Central Bank of Ecuador, measures the risk that a country will default on its international debt obligations. The higher the risk, the less confident the markets are that the country will pay those debts.

In any case, the price of Ecuadorian debt bonds 2030 has seen an improvement in terms of recent days spread (interest paid) between Ecuadorian bonds and government bonds. That spread, According to Ramiro Crespo, president of Analytica Securities, it has been shrinking in recent days, possibly as a result of the increasing possibility of Daniel Noboa winning and Correismo losing the race.

This one spread It was at 2,500 before falling to 2,200 in the last few days. But yields on the 2035 and 2040 bonds also fell, a sign that the market expects things in the country to improve in the future.

According to Ramir Crespo, it is not expected that there will be an immediate drop in country risk or a strong recovery in bond prices. Among other reasons, this is because the market has already assumed Noboa’s victory and therefore has already adjusted the indicator to this possibility.

However, for Crespo, that risk could be reduced when the first statements on economic topics are known, the team that will follow him, the relations he will have with multilaterals and the National Assembly, which should be established next December after the delivery. the credentials of the elected legislators to conclude in August, in early elections due to the cross death applied by the Lasso.

The expert believes that Ecuador will need at least about a year to reach previous levels. When the outgoing president won the presidency, Ecuador’s country risk fell by 345 points, from 1,169 points to 824 points on April 12, 2021. This indicator improved to 714 points on May 24, when he took office.

However, the risk to the country has increased again due to the low level of governance that has been demonstrated, especially due to the lack of cooperation of the Assembly and the violent protests of the indigenous sector. Another factor in the growth was the death of the cross, and in recent weeks there has also been a decline related to the increase in the price of crude oil.

For Crespo, Ecuador should worry about improving its rating. It is that its high risk country can be compared with other countries in the Middle East. Although it is much larger than that of neighboring countries such as Colombia, Peru or Chile.

Reducing the country’s risk, according to Crespo, is a goal that should be achieved because it would enable the country to refinance its debts, and the private sector to place bonds abroad.

Remember that the 2009 declaration of a debt moratorium by then-President Rafael Correa cost the country a fortune: “Maybe five times more in additional interest than what they supposedly saved by buying out the so-called illegitimate debt,” he comments. .

At the same time, he assures that this move of the then agent with debt redemption was not a good one.

Country risk, which reflects the reaction of international markets to the election of Daniel Noboa as the new president of Ecuador, will be known when the Central Bank updates its indicators on its portal, which usually happens at the end of the day or the next day. .