Ecuador to Pay 2030 Coupon in Grace Period

Ecuador has announced it will pay the coupon on its 2030 global bond, but during the 30-day grace period and not on the due date of February 15. Up until now, the government has been unclear about whether it would pay the $135 million interest and had indicated a debt restructuring or even default might be on the cards. In the end, it appears that more pressing domestic issues have made negotiations with international debtholders a lesser priority. However, analysts are unclear as to why Ecuador has chosen to delay the coupon payment, thereby incurring more costs. “[I]t is hard to understand the rationale for the government not [to] pay on the due date”, commented Goldman Sachs. “In our view, the decision to delay the payment is driven mostly by the domestic political agenda as the government tries to score political points by spinning the decision as evidence that external debt payments are not the government’s top priority”, continued the investment house. Deputy finance minister Fausto Ortiz, who announced the government’s intention to delay the interest payment, also explained that the government plans to shrink debt servicing costs by $500 million next year and will seek to extend the maturity on a $400 million loan secured from the Latin American Reserve Fund (FLAR) in 2005.