Holders Await Ecuador Buyback Gambit

Holders of Ecuador’s defaulted 2012 and 2030 bonds await the Correa government’s repurchase offer, which it says it would release before the start of this weekend’s IDB meetings in Medellin. The offer could be a cash transaction in which investors are offered at least a 70% haircut plus past due coupon and accrued interest, Barclays notes in a report. In the case of the Global 2012s the deal would be valued around $40. The shop says details of the offer will depend on how much cash the sovereign has available, and how much it may have already bought back through third parties. Barclays estimates the government could draw from $1.2bn at the central bank and another $1.2bn at the social security institute. Trustee US Bank and law firm Milbank Tweed hope to get holders of Ecuador’s defaulted 2030 to form an ad-hoc committee, following a conference call set for March 31. Ecuadorian brokerage Analytica Securities says that the outcome of that committee could be acceleration of payment of principal on defaulted bonds, for which it would need 25% of holders. However, the shop also notes that the prospects of legal action are unclear at best, and may not be more attractive than accepting a government offer.