SOVEREIGN DEBT RESTRUCTURING | MASTERCLASS

A deep dive masterclass on sovereign debt restructuring, to be conducted virtually by Asian high yield bond expert Florian Schmidt.

30 June 2022 (Thu), 5pm Singapore/HK time

Ecuador’s Finance Ministry sold $1 billion in bonds due 2029 at a yield of 10.75%, the steepest yield the nation has offered to investors since the financial crisis, when government officials had previously ruled out selling at double-digit rates. Markets had not expected Ecuador would issue until officials complete negotiations with the International Monetary Fund, especially as IMF Managing Director Christine Lagarde appeared to back President Lenin Moreno’s pledge for economic reforms after meeting him in mid January. The sovereign’s bonds had rallied then but the bond sale is now sparking questions about the way talks are proceeding. The high yields offered by the bonds due 2029 prompted Ecuador’s outstanding debt to slide the most since November, with its sovereign notes due 2028 falling in price to as low as 87.44 cents. Though the Finance Ministry reported in a statement that the bond sale does not rule out “other potential sources of funding, such as multilateral organisations and China”, it is crucial the market sees clarification from Ecuador on a potential IMF deal to avoid concerns from investors on the country’s funding sources.

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