UPDATE 3-Ecuador says debt sale participation "excellent"
* Ecuador says participation "excellent" in debt sale
* Says investors asking price is "rational"
* To carefully analyze bids, answer around May 26
(Adds new quote from minister about participation)
By Maria Eugenia Tello
GUAYAQUIL, Ecuador, May 18 (Reuters) - Ecuador saw stronger than expected investor participation in an auction to buy back $3.2 billion in defaulted debt and considers the prices asked by the market to be "rational," Finance Minister Elsa Viteri said on Monday.
"The response has been excellent. We are very happy," Viteri told reporters in the port city of Guayaquil. "It exceeded our expectations."
Bondholders had until May 15 to bid in the modified Dutch auction. The leftist government of President Rafael Correa plans to announce the final repurchase price around May 26.
Some investors calculated that close to 90 percent of debt holders made offers to sell their debt and avoid years of tough legal battles against the government. In later comments, Viteri said investor participation was likely "way above" 75 percent.
When asked about the price range in the bids, Viteri said: "For what we got initially, the market has been very rational."
Her comments could signal that investors' bids were close to the 30 cents on the dollar Ecuador was asking as a starting price in the auction.
The widely popular Correa refused to repay the country's 2012 and 2030 global bonds last year on charges that the debt was riddled with irregularities and was issued illegally by past corrupt administrations. Ecuador hopes to buy back nearly all the debt it says is unfair to the poor country.
"We are very happy that ... children born in this country from now on will not have to bear the burden of one-third of the foreign debt," said Viteri, referring to the 2012 and 2030 global bonds that make up 30 percent of the nation's public foreign debt.
She said the government will carefully analyze the offers before it decides on the final price of repurchases.
Many market watchers on Wall Street say Ecuador has a key advantage because Correa had already bought back most of the debt when the country started to threaten a default and dragged down market prices in late 2008. Ecuador has not confirmed or denied past buybacks.
Most holders of defaulted debt have so far failed to create a united front against Ecuador to seek repayment via courts.
Two top regional lenders last week publicly backed Ecuador's debt restructuring, in a move that could strengthen Ecuador's position against bondholders by giving some legitimacy to the default.
The global financial crisis has lowered the tolerance for risk of many investors, who could choose to take some losses and sell their defaulted bonds at a cheaper price. (Writing by Alonso Soto; Editing by Leslie Adler and Andre Grenon)
- Tweet this
- Share this
- Digg this