Ecuador is pushing ahead with plans to return to the dollar
markets, its international trade minister Francisco Rivadeneira
has told LatinFinance.
"Ecuador has the interest and now the capability to go back
to the international capital markets," Rivadeneira said Friday.
"That includes issuing bonds. That is of interest."
Ecuador has been looking to exchange defaulted debt in the
hands of holdout creditors since the second quarter, as
LatinFinance reported in May.
In the US to drum up interest for investment in Ecuador's
mining, oil, transport, and other projects, Rivadeneira said
the country had become more attractive to foreigners.
"Our risk has lowered. We have political stability,
macroeconomic stability. We have social stability, and we have
a lot of interest from investors to come in and finance the
country and different projects.
"We've seen, especially over the past year and a half, a lot
of [firms from] Europe, Japan, South Korea, US and Canada are
interested in investing."
The country hoped to tap the international debt markets in
2014, "if not before", Rivadeneira told
An Ecuadorean bond would continue a run of rare Latin
American sovereign borrowers in the dollar markets.
Paraguay are among those to have debuted, taking advantage
of a period of investor enthusiasm for yieldy credits earlier
this year and last year.
The cost of borrowing in the debt markets has risen since
May, when the US Federal Reserve first raised the possibility
it would end its quantitative easing program.
Ecuador borrows heavily from China - most recently signing a
$1.2 billion bilateral loan in August. But with an economy
heavily dependent on oil revenues, a fall in prices could
increase the country's budget deficit, says Capital
Ecuador's budget deficit could hit 5% of GDP if oil prices
fall to $90 a barrel over the next 12 months, which is the
firm's base case, Capital Economics has calculated.
"Growth has been propped up by a loosening of the public
purse strings that may prove unsustainable if oil prices now
decline," the analysts said.
Rivadeneira outlined to LatinFinance a sweeping
series of investment projects that will "change the production
matrix of the country", towards value-added goods. These
included mining, oil, petrochemicals and transport
A third oil refinery is set to come online in 2017 or 2018.
The first part of the project has been 20% to 30% financed by
the Ecuadorean government. The remainder of the $10 billion to
$12 billion project has been financed through debt and equity,
mainly with the Chinese government and Chinese companies, he
The refinery will be the largest in the South Pacific, and
is likely to refine oil from Venezuela and Colombia, as well as
from Ecuador, Rivadeneira said.
Ecuador is working on feasibility studies for a second part
to the refinery, which will be privately financed, and which is
likely to cost $12 billion to $15 billion.
The country is interested in attracting further investment
in the mining industry. Already Chinese investors have put
several billion into the country's largest copper mine. Ecuador
hopes to attract others through a concession model.
"We have some mines that are ready to be exploited," said
Rivadeneira. "We're looking for partners."
A new airport in Guayaquil is also planned in the coming
years and is likely to be financed through a concession model,
he said. LF