April 2, 2014 / 9:52 PM / 4 years ago

After default, Ecuador preps return to market: sources

NEW YORK, April 2 (IFR) - Ecuador could return to the international bond markets to raise up to USD1bn as soon as May or June, two investors said on Wednesday, including one with close ties to the sovereign.

The country, out of the market since defaulting on USD3.2bn of debt in December 2008, has hired Citigroup and Credit Suisse to meet investors in London and the States in the next few days.

While the meetings are officially not part of a new deal, the sovereign said last year it intends to be back in the debt capital markets in 2014.

“They wouldn’t be ready for the April window, but I’d say this is more like May or June business,” said the investor close to the issuer.

He said Ecuador is looking to raise as much as USD1bn, along with other market sources.


Since the default, Ecuador has bought back 91% of two bonds maturing in 2012 and 2030 at 35% of face value, leaving about USD288m outstanding.

Lazard, which was involved in some of the buybacks, has helped chip away at those, leaving around USD130m still in the market, according to one of the sources.

“The last chunk they bought back was well above reissue,” said one distressed debt investor, giving a range of 43% to 45% of face value.

Lazard was not immediately available to comment.

But with that small an amount of remaining debt, investors are likely to be less concerned about potential litigation risks, the investor said.

“Market memory is pretty short. Primary market buyers don’t look through documents with the same depth as distressed people either. I’d be surprised if an issue doesn’t get done.”

He added: “A couple of the big guys who held out on the initial deal may try to hold out for par, which would be a concern.”

Ecuador, rated Caa1 by Moody’s and B by both S&P and Fitch, has just one bond that trades, a deal maturing in 2015. It was seen Wednesday at 106.45 mid-market with a G-spread of 500bp and yield of 5.40%.

The country seems to be pulling out all the stops for the roadshow, sending out Finance Minister Fausto Herrera Nicolalde, Diego Martinez from the central bank and other top officials including Willam Vasconez Rubio, Paul Villareal, Daniel Falconi and Javier Lopez.

The Ecuadorean public credit office, Citi and Credit Suisse were not immediately available to comment. (Reporting by Joan Magee; Editing by Natalie Harrison and Paul Kilby)

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