Ecuador´s bonds rallied this month, outperforming its Emerging Markets peers. As per Bloomberg data, Ecuador’s dollar bonds are up 6.4% YTD on average, as compared to the EM with an average loss of 4.2%. The price increase is due to a 23% rise in oil prices and a recent deal with the IMF, improving the country’s economic outlook. Ecuador’s international reserves have jumped 45% in a year to $8.41bn and its fiscal deficit is expected to drop from 3.5% in 2021 to 2%. Cathy Hepworth, head of emerging-market debt at PGIM Fixed Income said, “Political stability isn’t necessarily a strong suit in Ecuador. Oil prices clearly helped them significantly and they managed the relationship with the IMF better than people would’ve thought.”
Ecuador’s USD bonds have been rising steadily since the beginning of February with its 0.5% 2040s up 4.5 to 52.12, yielding 11.46%.
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