Ecuador 2012 Call Unlikely: JPM

A call of Ecuador 2012s seems unlikely this year, according to JPMorgan, because of the potential political cost. “Using fiscal resources to exercise the call could have a big political backlash – especially at a time when floods are forcing the government to declare an emergency and deploy resources,” says JPM. The finance ministry, however, is considering its options in terms of liability management. Investors could meanwhile benefit from the strength of these bonds. “Given the improved near-term fiscal position and the very low probability of a ’12s call, these bonds will keep offering one of the highest carry in EM external debt with low volatility,” the shop says.