S&P Raises Ecuador to B-

S&P has raised Ecuador’s long-term sovereign credit rating two notches to B- from CCC, while keeping the short-term sovereign credit rating at C. “The two-notch upgrade and stable outlook are underpinned by evidence of increased government pragmatism to meet debt service,” analyst Lisa Schineller wrote in a report. “This is coupled with higher government oil revenue stemming from greater-than-anticipated oil prices and the increased government take from oil production.” Ecuador has $3.86bn of outstanding global bonds. The government’s liquid deposits and balances in various oil funds total around $3bn, compared with about $425m in debt service due during the remainder of 2007-2008 and almost $800m in debt service for locally-issued debt during this same period, according to S&P. “In the short term the comfortable liquidity position amid mild debt service load (less than $450m in bonded debt coupon payments in 2008) should significantly reduce the probability of a market unfriendly debt restructuring or other type of credit event,” says Goldman Sachs. S&P is two notches above both Moody’s (Caa2; outlook negative) and Fitch (CCC; outlook stable). “We do not rule out Moody’s removing the negative outlook in the near term,” Goldman adds.