Minister Herrera Assures Payment of Global Bonds 2015

ECUADOR - In Brief 04 Nov 2015 by Magdalena Barreiro

Minister of Finance Fausto Herrera announced today that financing needs for next year's budget will be around $6.6 billion. According to the Minister sources for $4.5 billion are already identified: $2 b coming from multilateral institutions (World Bank, IDB, CAF) and $1.5b from China. The government also expects to issue an additional $1b in private bonds. Government officials recognized that financing costs will be to high if country risk remains at current levels. As of October 13, the spread for the Ecuadorian debt was 1386 BP. This is why the government is taking "serious steps" to reduce it, the finance authorities declared. As part of the plan they have hired credit rating agencies to present better and more transparent information. They believe that this initiative is already rendering results as the country risk spread by October 29, 2015 shows a drop of 151 bp. Three years ago, President Correa was declaring that country risk is the most useless economic indicator and that he could not care less about it. Additionally, Herrera and Rivera stated that paying the par value of Global Bonds 2015 ($650 million) will be "an important signal to the market. Therefore, this turn in assessment results important and gives some assurance that at least on the financial side of the policy they will be taking the correct steps. Finally, Herrera announced they are planning to carry out a securitization of around $1000 million of financial paper from the Social Security Institute to attract international resources to the Ecuadorian Economy.

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