Bond buyers expect Ecuador return

Bond buyers expect Ecuador return

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Bond buyers expect Ecuador to return to the cross-border bond market in the second half of 2019, LatinFinance has heard.

The sovereign issuer could sell international notes for $500m or more as it looks to meet $4.6bn in funding needs before the end of the year, investors said.

"It would not make sense for them to issue anything less than $500m," said a bond buyer in London.

Ecuador has lined up $10.2m in financing from the IMF and six other lenders, including the IDB and CAF, to go along with the $1bn in 10-year bonds it issued in January.

The IMF has agreed to disburse a $4.2bn loan over three years, but Ecuador still has to cover a $4.6bn financing gap for the next nine months, the investor said.

"The IMF provided roughly half of this year's needs," he said. "We expect them to come back to the market later this year, possibly with a bond, though they have other alternatives."

If Ecuador meets the IMF's requirements to reduce public debt, the country's borrowing costs could come down from the 10.75% it paid in January, the investor added.

The country issued the notes out of "desperation," he said, knowing it would have to pay a higher yield than the 7.875% it offered for $3bn in 10-year notes in January 2018.