Merrill Cuts Ecuador Exposure to Zero

Merrill Lynch has cut its Ecuador exposure to zero in its model external debt portfolio. The shop says it believes bond prices have further downside in an eventual default or restructuring scenario. It also cut Uruguay to underweight from market weight, as it sees the credit as expensive and says deteriorating fundamentals in Argentina will weigh. Jamaica was also downgraded to underweight from market weight as the country is expected to be severely affected by slowdown in the US economy. Merrill says keeps its market weight recommendations for Argentina and Mexico and its overweight recommendation on Peru, but cuts excess exposure versus recommended allocation in the three countries.