Ecuador pays double digits on new notes

Ecuador pays double digits on new notes

Bonds Debt Capital Markets Corporate & Sovereign Strategy Economy & Policy Fixed Income Politics Ecuador

Ecuador said it has sold $1bn in 10-year bonds at 10.75%, but it has not ruled out going to China or the IMF for additional funding this year.

The bookrunners Citi, Deutsche Bank and JPMorgan launched the deal at 11%, but lowered the price after receiving more than $3bn in orders from 220 investors.

"The rate of 10.75% was 25 basis points lower than the initial price," Ecuador's Finance Minister Richard Martínez said in a statement.

The ministry noted that Ecuador returned to the cross-border bond market as oil prices hovered around $52 per barrel and as rating agencies cast a negative outlook on the country's credit ratings.

The latest bond sale covers 12.5% of Ecuador's financing needs for 2019, but it does not mean the country will not seek additional funding this year from multilateral agencies and China, the ministry said.

Officials from the finance ministry told investors late last year that the government could sell up to $1.75bn in bonds or borrow some $1.5bn from the IMF and China to fill a hole in the 2019 budget.

IMF Managing Director Christine Lagarde met Ecuador's President Lenín Moreno in Davos, Switzerland last week and voiced her support for the government's reforms program. China granted a $900m loan in December and agreed to provide more financing this year.

Ecuador needs to raise $8.1bn in funding this year. The finance ministry has said it expects to receive $1.6bn from China and another $1.6bn from multilateral lenders, including $860m from the Latin American development bank CAF, $420m from the World Bank and $320m from the IDB. The country also plans to get $1.5bn in oil-backed loans and $1.4bn in other financing from commercial banks. It expects to earn an estimated $1.4bn from oil sales in 2019.

Ecuador sold $3bn in 10-year notes at 7.875% in January last year.