Two years ago, Ecuador was at the forefront of an anguished
debate over the appropriate role of the International Monetary
Fund, bondholders and the local government in sorting out the
country's debt problems.
In the end, with the surreptitious support of the Fund,
Ecuador defaulted on $6.46 billion in Brady bond debt as a way
of "bailing in" private sector creditors. Quito later hashed
out an agreement with bondholders, handing them a 40% haircut.
This, it was felt, was a market-based solution to the crisis
that broke with traditional IMF-backed bailouts of governments
and their lenders.
That precedent proved nothing because Ecuador, as an obscure
Andean country is just too small and too marginal to mean much
Already have an account?
Subscribe now for unlimited access to all current and archive news, data and market analysis.
Take a free two-week trial now for the latest news, data and market analysis.