Moody’s Downgrades Ecuador

Moody’s Investors Service has joined the other two major international ratings agency in downgrading Ecuador’s sovereign ratings as investor concerns mount over a possible default. Ecuador’s foreign-currency government bond rating and the foreign-currency country bond ceiling were downgraded to Caa2 with a negative outlook from Caa1 with a stable outlook. The outlook on the Caa2 foreign currency deposit ceiling was revised to negative from stable. Moody’s also downgraded the country ceiling for local-currency deposits from Caa1 to Caa2 with a negative outlook. According to Alessandra Alecci, a senior analyst at Moody’s, Ecuador’s “decision to restructure obligations is purely based on ideology”, and “a meaningful alleviation of cash flow could only be obtained by a restructuring with sizeable losses to creditors”.