Ecuador has reached a deal with the holders of nearly $20 billion in sovereign bonds to delay interest payments through August, as a plunge in oil prices and the coronavirus outbreak weigh on public finances, the Finance Ministry said on Friday.
The Andean country last week asked creditors to delay the payments on nine bonds maturing between 2022 and 2030 to free up some $811 million to devote resources to fighting the outbreak, among the worst in Latin America. The deadline had been set to Friday.
The deferral will set the stage for a renegotiation process between the cash-strapped oil-producing nation and its creditors beginning on Aug. 15, the ministry said.
“The debt holders trust Ecuador. They have agreed to renegotiate,” President Lenin Moreno said on Twitter. “We just saved $811 million to alleviate the national emergency affecting the country.”
The deal was accepted by 91% of the holders of eight of the bonds, and by 82% of the holders of the 2024 bonds, the Finance Ministry said in a statement.
The ministry said the deal would not have been possible had it not made a $325 principal payment on its 2020 bonds last month, a move that was criticized by some labor and indigenous leaders as a poor use of public funds in the crisis, but that the government said demonstrated its good faith.
Ecuador’s finances have been further pummeled by the rupture of its two main oil pipelines after a landslide last week, prompting a halt in crude exports. The state-run SOTE pipeline is expected to be up and running before the end of the month, while repairs on the privately run heavy crude pipeline are expected to end by May 4.