Dollar bonds of Ecuador dropped by over 10% with its 5.5% 2030s falling over 10 points to 59.93, yielding 19.3%. This comes after partial results from the constitutional referendum showed that voters were planning to reject a series of proposals put forward by President Guillermo Lasso. Bloomberg notes that the preliminary results defied polls which predicted a broad approval of the constitutional amendments that included a change that would allow extradition of drug traffickers. Here, 95% of votes have been tallied, and a majority of 51.5% have so far rejected Lasso’s proposal.

Katrina Butt, an economist for EM at AllianceBernstein said, “If the results hold, it’s not a good outcome for Lasso. The market is starting to price a worst case scenario: Lasso loses the election, then Assembly turns against him more, then there’s renewed impeachment talk.” Analysts also note that the results could significantly increase the headline and political risk, further weighing on the rating of the sovereign’s debt.

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