Ecuador sees a return to capital markets in an orderly manner

Ecuador It will seek to return to the international capital market in an “orderly” and “predictable” manner, which is why it is working to regain its credibility after a process of restructuring its sovereign bonds, declared the Minister of Economy and Finance, Simón Cueva.

The northern nation managed last year to restructure some US $ 17.4 billion by exchanging about ten outstanding papers for three new bonds maturing in 2030, 2035 and 2040 and improving interest rates.

After the exchange, Ecuador has not issued new debt despite its liquidity problems, exacerbated by the COVID-19 coronavirus pandemic, to obtain financing.

“Ecuador has a vocation to gradually return to the international capital markets, it is healthy for the country to be in the markets,” Cueva told reporters. “But do it in an orderly and predictable way.”

“Ecuador has a not-so-good history in international markets, with many stories of default, restructuring, and changes, and we want to build a serious, credible country abroad,” he added.

President Guillermo Lasso, a former conservative banker who took office in May, had said in September that Ecuador did not plan to issue new debt in the short term because it has sufficient resources available thanks to financing from the International Monetary Fund (IMF), so it is unnecessary to flood the market with bonds of the country.

Lasso contemplates within his planned spending plan for next year, “external placements” for some US $ 1.2 billion, which would include bond issues and commercial operations with private banks.

But a decision to enter the capital market will depend on the internal economic measures promoted by the government such as a tax reform, which is under debate in the Legislature, and dialogues with multilateral organizations and bilateral cooperation, Cueva explained.

Ecuador has turned to the IMF and other lenders to seek better loans and hopes to maintain that debt as one of its main sources of financing during 2022.

The government foresees external loans for US $ 3.6 billion, according to the proposed budget for next year.

“If we have to go to the international capital market, it will be in an orderly, predictable, transparent way,” Cueva insisted.

The Andean country declared in 2008 a moratorium on part of its commercial debt. In 2014 it returned to the market with a paper issue.

Sovereign bond debt amounts to about US $ 17.7 billion, equivalent to 17.3% of GDP, as of July 2021, according to data from the Ministry of the Economy.