Ecuador – 2000 Sovereign Debt Exchange Transaction Anatomy
Wall Street Journal, July 18, 2020 “ Funds Clash Over Deal on Ecuador “
To swap $18 billion bonds into new that pay lower interest with delayed maturity. Restructuring debt proposals create creditor – including Ashmore Group, BlackRock, T. Rowe Price, Contrarian Capital – differences in how different bonds are to be treated. New transactions being asked to linked to ESG goals.
- Ecuador seeking to restructure debt during coronacrisis, and lower oil prices given new liquidity and debt sustainability challenges
- Oil dependent economy heavily reliant on external credit where external interest payments are 10% of current external receipts
- For history of Ecuador Debt Restructuring we recommend: Feibelman, A. (2017). Ecuador’s 2008–2009 Debt Restructuring. In J. Bohoslavsky & K. Raffer (Eds.), Sovereign Debt Crises: What Have We Learned? (pp. 48-64). Cambridge: Cambridge University Press. doi:10.1017/9781108227001.004
- We examine here the anatomy of Ecuador Debt Exchange Transactions — 2000 , the first instance of default in Brady Bonds
The Wall Street Journal, July 8, 2020 reports” Argentina Bonds Rise On New Debt Deal ” : Average recoveries around $53.50, swaps existing bonds to newer lower interest paying, delayed maturity..
Earlier on May 23, 2020 The Wall Street Journal reported ” Argentina Defaults on Sovereign Debt Amid Coronavirus Crisis – The country is struggling with economic contraction, runaway inflation and a hard-currency squeeze”
Argentina defaulted on sovereign debt for the ninth time in its history, as Latin America’s third-biggest economy grapples with a new cycle of economic contraction, runaway inflation and a hard-currency squeeze exacerbated by the coronavirus pandemic. The cash-strapped country officially entered into default on Friday after failing to make a $500 million interest payment on foreign debt. The…
We examine here the anatomy of historical instances of Argentina Debt Exchange Transactions — February and June 2001
–Argentina Reverse Dutch Auction exchange – February 2001 when the Republic successfully exchanged over $8.0 billion of international and domestic securities
–Argentina “Mega Debt Exchange”—June 2001 when the Republic successfully executed a $29.5 billion debt exchange of 46 eligible international and domestic debt securities
Argentina -Sovereign Debt Exchange Transactions 2001 Anatomy