(Recasts, adds finance minister's comments)
By Alonso Soto
QUITO Dec 15 Ecuador will not pay interest on
its 2015 global bonds on time, Finance Minister Elsa Viteri
said on Monday, as the market wondered if the country was
leaving open the chance of honoring that debt.
"We also declare ourselves in technical default" on the
2015 global bonds, Viteri told reporters, without explaining
Ecuador's default is Latin America's first on sovereign
bonds in six years and caused the country's debt prices to
plunge, although the region's others credits were little
affected because investors doubt other governments will follow
On Friday, President Rafael Correa declared Ecuador would
not pay a $31 million interest payment due on Monday on the
country's 2012 global bond, also dollar-denominated. A 30-day
grace period expires Monday on that payment, which was
initially due on Nov. 15.
Ecuador has about $10 billion in foreign debt, $3.8 billion
of which is in three global dollar-denominated bonds, including
the bonds maturing in 2012 ECUGLB12=RR, ECUGLB2015=RR and
On Friday, Correa said the country was defaulting on all
its global bond debt and would seek a restructuring of the $3.8
billion in debt.
He cites as grounds for the default that debt was
"illegal," meaning the government found irregularities in
credits contracted by prior governments.
But top officials said the leftist government was still
determining its move on the 2015 bond, raising the question of
whether it might make the payment before its 30-day grace
Ecuador has a coupon payment -- also for $31 million -- due
on Monday on the 2015s, although the government has a 30-day
grace period to make the payment should it choose to.
"If the government pays the 2015 bonds, then, I think, it
shows they are completely lost," said Alberto Bernal, an
analysts with Bulltick Capital Markets. "It shows they are
The 2012 and 2030 bonds differ from the 2015 bonds in some
The first pair was issued in 2000 in exchange for $5.6
billion in dollar-denominated bonds on which Ecuador defaulted
in 1999. The 2015 bond was issued in 2005.
Another difference is in the perceived legality of the
bonds, from the standpoint of an Ecuadorean debt audit
The commission, which rendered its report to the president
in November, said it found evidence of illegal irregularities
in the 2012 and 2030 bonds. But the report did not mention the
The face value of the global bonds are $510 million for
the 2012, $2.7 billion for the 2030 and $650 million of the
Ecuador plans for now to keep up payments on the rest of
its foreign debt, which includes loans from multilateral banks
and other countries.
Ecuadoreans scouring the country's press could be forgiven
for being confused. Newspapers on Monday speculated the
government would default on the 2015s or make the payment or
use the grace period to decide whether to pay.
(Editing by Dan Grebler)