Ecuador Signs $1bn China Loan

Ecuador’s government has signed a $1bn loan with the China Development Bank, its finance ministry says, emphasizing that there is no oil collateral involved. A $200m tranche is earmarked for special projects in the petroleum sector, with the remainder for general use. The 4-year loan pays a fixed interest rate of 6% and features a 6-month grace period. In addition to the $200m for oil projects, proceeds will be used to finance Ecuador’s investment program for infrastructure and other 2010-11 budgetary outlays. “This loan is not repaid with crude, nor has any guarantee or collateral of oil,” the finance ministry says. Ties between the 2 nations are already among LatAm’s coziest. China’s eximbank is lending $1.7bn to a hydroelectric plant which will start construction soon under China’s Sinohydro. Last year, Petroecuador, and PetroChina signed a 2-year crude-oil supply contract kicked off with a $1 billion advance payment.