Ecuador is planning meetings with fixed-income investors and the country may follow with its first bond sale abroad since a $3.2 billion default five years ago, according to a person with knowledge of the plans.
The South American nation hired Citigroup Inc. and Credit Suisse Group AG to arrange meetings in the U.S. and U.K. starting tomorrow, according to the person, who asked not to be identified because the information is private.
The plans come three weeks after hedge fund Greylock Capital Management LLC said the nation agreed to buy back about 80 percent of its remaining defaulted debt from 2008 and 2009 to help pave the way for a bond sale. Faced with a budget gap that’s set to reach a record this year, President Rafael Correa said in April he planned to sell about $700 million of foreign debt this year.
“They have created some goodwill to normalize creditor relations,” Siobhan Morden, the head of Latin American fixed income at Jefferies Group LLC, said in an e-mailed response to questions. “Their economic cycle now favors a strategy of more capital inflows and alternative sources of funding.”
Ecuador’s $650 million of notes due 2015, which Correa kept servicing after defaulting on the other bonds, were little changed as of 11:06 a.m. in New York to yield 4.65 percent.
On May 24, Finance Minister Fausto Herrera said the government agreed to allow the International Monetary Fund to perform an economic review for the first time since 2008. Ecuador hasn’t allowed a so-called Article IV consultation since it paid off its debt with the lender in 2007.
Last week, Ecuador obtained a $400 million loan from Goldman Sachs Group Inc. by pledging part of its gold reserves as collateral. The three-year credit carries an annual interest rate of 4.3 percent, according to the central bank.
Correa, a 51-year-old former economics professor, halted payments on $3.2 billion of debt that he deemed “illegitimate” five years ago after a commission he formed said the debt showed “serious signs of illegality.”