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Ecuador Bonds Rise Most in Two Weeks on $2 Billion China Loan

Ecuador’s bonds rose, pushing yields down the most in two weeks, after the government signed an accord for a $2 billion loan from China.

The yield on Ecuador’s 9.375 percent bonds maturing in 2015 fell 5 basis points, or 0.05 percentage point, to 9.55 percent at 12:49 p.m. New York time. The price of the security rose 0.17 cent to 99.38 cents on the dollar, according to prices compiled by Bloomberg.

Ecuador agreed to take out a $2 billion loan from China Development Bank Corp., two people familiar with the matter said today. The agreement was signed in Beijing today, according to one of the people, who asked not to be identified because the terms haven’t been made public.

“Ecuadorean bonds have an extraordinary yield in an enormously liquid market characterized by absurdly low yields,” said Paul Palacios, the president of Albion Casa de Valores SA Palacios, the nation’s third-largest brokerage. “This type of loan shows investors that Ecuador is worthy of credit, at least for the Chinese.”

Ecuador’s Finance Minister Patricio Rivera said June 14 the country was seeking a $2 billion loan from China to finance budgeted public works projects, including a hydroelectric plant and repairs to railroads. The loan will have an interest rate of 6.9 percent and a maturity of eight years, he said at the time.

The Finance Ministry didn’t immediately respond to a telephone message today seeking comment.

To contact the reporter on this story: Nathan Gill in Quito at ngill4@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at Papadopoulos@bloomberg.net

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