Ecuador gets bondholder consent for suspension of debt service until August

Ecuador gets bondholder consent for suspension of debt service until August

Bonds Debt Asset Management Capital Markets Corporate & Sovereign Strategy Fixed Income Ecuador Latin America Coronavirus

Ecuador, late on Friday, said it succeeded in getting consent from bondholders to defer $811 million in interest payments due between March 27 and July 15 to August 15

Seeking relief from short-term financial obligations amid the COVID-19 pandemic and the fall in oil prices, Ecuador had announced the consent solicitation on April 8. The call expired on Friday at 5 pm.

More than 91% of holders of 2022, 2023, 2025, 2026, 2027, 2028, 2029 and 2030 agreed to the solicitation, and more than 82% of the holders of 2024 bonds also consented.

The bonds represent more than $19 billion worth of debt outstanding.

In an online plea to investors on April 13, Minister of Finance Richard Martinez said that the country was needing liquidity relief because debt service costs could consume 31% of fiscal revenues in 2020, adding that the country’s gross financing needs had grown to $13 billion from $5.6 billion, and that $3.4 billion in financing resources still needed to be identified.

On April 15, Ecuador amended the original consent solicitation at the request of investor, maintaining in place cross-default provisions on two series of bonds.

In phase two of the consent solicitation, to take place between Friday and August 15, Ecuador will be engaging in bilateral discussions with creditors for a medium-term solution, analysts say.

“We expect to find the solution for debt management with bond holders by early August,” Martinez said in the April 13 online presentation.