Bondholder groups reject Ecuador's restructuring offer

Bondholder groups reject Ecuador's restructuring offer

Bonds Debt Capital Markets Corporate & Sovereign Strategy Fixed Income Ecuador Coronavirus

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Three groups of bondholders have responded to a proposed bond swap from Ecuador with two groups rejecting it and one expressing support, according to separate statements on Monday.

A group of 25 institutional investors, including Amundi, Contrarian Capital Management, Grantham Mayo Van Otterloo (GMO) and T Rowe Price, dismissed the offer, saying "the terms... do not represent Ecuador's best effort to reach an equitable restructuring with a majority of bondholders or its ability to implement social development goal principles to build a sustainable future."

The group stuck by the counteroffer it presented on July 16, which it claimed was more balanced and conformed to Ecuador's payment capacity.

Another group of holders of Ecuador's 2024 notes also refused Ecuador's offer. Together, the two groups hold more than 25% of Ecuador's bonds and more than 35% in certain series.

On the other hand, a group of bondholders that includes AllianceBernstein, Ashmore Group, Ayres Management, BlackRock, BlueBay Asset Management and Wellington Management came out in support of Ecuador's plans to restructure $17.4 billion in outstanding bonds. The group, which calls itself the Ad Hoc Group of Ecuador Bondholders, holds more than 53% of Ecuador's sovereign bonds.

Ecuador had asked bondholders earlier in the day on Monday to exchange bonds for a new notes and added that it wanted to modify the terms and conditions of its external bonds.

Finance Minister Richard Martínez said on July 6 that the government had reached a debt restructuring agreement with a large group of bondholders. The agreement is said to result in a cut in debt payments and an extension of maturities for its foreign debt obligations.

Martínez said this government proposal would mean there would not be any additional payments made this year and that a total of $11 billion dollars that were scheduled to be paid before 2025 had been postponed for later years.