Ecuador Gets Positive Outlook

In perhaps the only good news for the region Thursday, S&P raised the outlook on Ecuador’s B minus debt rating to positive from stable. “Higher levels of available deficit financing from China, combined with increased oil revenues, have allowed for greater public investment, which in turn have boosted Ecuador’s near-term growth prospects,” the agency says. It also notes relatively low external and fiscal debt burdens. An upgrade could come if the government successfully increases public investment and puts in place policies to boost private investment, including foreign direct investment. However, S&P reminds market participants that Ecuador’s recent history of default, as well as its economic policy inconsistencies, continue to constrain the rating. Ecuador defaulted on its 2012 and 2030 global bonds in 2008, resolving the matter in June 2009 through a special auction in which it repurchased the bonds at depressed levels. External market financing has been closed to Ecuador ever since the default, limiting the government’s financing options. President Rafael Correa made public remarks this week about hoping to access external markets before the end of 2012, according to wire reports.