Government returns to bond market to cover deficit it blames on Rafael Correa

Jan 30, 2019

Ecuador’s finance ministry said it has placed $1 billion in 10-year sovereign bonds in the international market. Proceeds from the 10.75% bonds will be used to strengthen the country’s reserves and help fund this year’s budget which has financing needs of about $8 billion, the ministry said in a statement.

Rafael Correa

“Ecuador has always been alert to a window of opportunity to go into the markets and this issue does not mean that the permanent dialogue and communication with other potential sources of financing, such as multilateral organizations and China, is closed,” it said.

The announcement came days after President Lenin Moreno said Ecuador is in negotiations with the International Monetary Fund (IMF) to secure a loan. Moreno said the country would only pursue the loan if the IMF agrees to its requirements that funding for programs to assist the poor are not jeopardized.

Ecuador faces liquidity problems it blames on large fiscal deficits and external debt produced during the government of former President Rafael Correa. “We were dealt a bad deal by the previous government and are doing our best to clean it up,” Moreno said.

The government said it obtained a yield that was 25 percentage points lower than the 11% established in the initial guide.

Citigroup, JP Morgan and Deutsche Bank are acting as placement leaders, according to IFR, a Refinitiv service, citing one of the agents in charge of the operation.

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