Posts
President Rafael Correa says his government may sell international bonds for the first time since 2005 as emerging market appeal grows for investors.
Ecuador defaulted on bonds in 1999 and declared $3.2 billion of notes invalid in 2008. Correa also wants to restore investor confidence after police riots last month sent the nation’s yield spread as high as 12.3 percentage points. But Correa paid off the IMF in 2007.
“Thanks to God, in the last years the dollar has been very weak so that is good for us because with a weak dollar we can recover a little bit of competitiveness,” Correa said. “Since we adopted dollarization, or the dollar as national currency, the Federal Reserve policies have been convenient.”
Some strategists feel that investors needing higher returns amid near-zero interest rates in the U.S, Europe and Japan may overlook Ecuador's past credit issues and buy new debt.
“This whole investors’ push for yields has brought out a lot of emerging-market borrowers, both corporates and sovereign, said Win Thin in NYC. “It’s a little scary.”
