Ecuador Pays 35 Cents for Defaulted Bonds in Buyback

Ecuador paid 35 cents on the dollar to holders of as much as $3.2 billion of defaulted bonds and gave creditors a second chance to sell back their securities.

The payout is 5 cents more than the minimum price set by the government and the 30-cent payout offered by Argentina in its 2005 debt restructuring. Ecuador didn’t say how many investors participated in the buyback.

The government, seeking to pressure bondholders into participating, said it won’t improve the offer to those creditors who hold out of the buyback auctions. President Rafael Correa halted payments in December on $510 million of 2012 bonds and in March on $2.7 billion of 2030 bonds, saying the securities were “illegitimate” and “illegal.” A drop in oil exports has sparked a tumble in Ecuador’s reserves.

The repurchase prices “reflect the resources of the republic and are responsive to the majority of the offers received,” Finance Minister Maria Elsa Viteri said in a statement. “The republic will not offer equal or more favourable terms to those being offered to holders of bonds presently.”

Ecuador’s stance is similar to that of Argentina after its 2005 debt settlement. Creditors holding $20 billion of the bonds Argentina defaulted on in 2001 rejected the government’s offer of about 30 cents on the dollar. Then-President Nestor Kirchner pushed legislation through congress that blocks the government from making a second offer to creditors.

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Ecuador #1 in Economic Growth in Latin America - The Latin American Herald

Ecuador President Rafael Correa said that his country’s economic growth in 2008, which according to the latest estimates was 6.5%, was among Latin America’s highest despite the international financial crisis -- and despite defaulting on a portion of the nation's international debt.

“The latest estimates from the Banco Central say that total growth in 2008 was 6.5 percent – that’s the highest in a long time,” Correa said on his customary Saturday radio and television program.

He also said that if the oil sector were removed from the calculations, the Ecuadorian economy last year grew 7.95 percent, which would represent the highest surge since the 1970s when Ecuador enjoyed an “oil boom.”

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South-South Cooperation in focus: Peruvian PM to meet with Correa in Ecuador

The PM of Peru, Yehude Simon travels to Ecuador today to hold a meeting with Ecuador's president, Rafael Correa (the one who recently caused all those headlines with the bonds) to discuss bilateral trade topics.

According to the information reported over at Andina, Simon is heading to Ecuador discuss and resolve any problems related to the Resolution No 466 adopted by the Foreign Trade and Investments Council (COMEXI) of Ecuador.

"Resolution No 466 authorizes the application of a protection measure for balance of payments, general and not discriminatory, to imports of all countries including those that have trade agreements in force with Ecuador which recognize tariff preferences, as it is the case of Peru."

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South-South Cooperation -- Ecuador seeks $280 million credit line from Iran

Ecuador is reaching out to its new buddy, Iran for a credit line of $280 million usd to finance pipeline and other oil-sector related projects according to what Mining and Oil Minister Derlis Palacios told the Dow Jones Newswires yesterday (click here for the article, provided via Rigzone).

Senor Palacios seems confident Ecuador will get the money too. Stating in a telephone interview "We are asking for a credit line of $280 million, especially to invest in our pipelines. We are sure that this money will come."

This is all very intriguing. I must admit Correa has done some good for Ecuador and my opinions on him have personally evolved over the years, and in a positive way. However, messing around with Iran on the heels of months of intense fighting with foreign companies and THEN causing hysteria with the country's bonds will definitely reverberate for years to come in the international community.

Yes, it is true Ecuador probably would probably have a hard time securing a loan from any normal western financial institution and that it has all the right in the world to look elsewhere. I just question the path Correa and the political big whigs in Ecuador think is best for the future of Ecuador.

If the political situation changes and new leadership seeks to pursue a different path, one less antagonistic of the international community perhaps, it will be a hard process of re-affirming confidence after all of it.

However, if the world was fair I think Ecuador should be able to go ask Iran for a loan if it wants. They are in the end both developing countries that could probably benefit from cooperating with one another. Sadly we don't live in a fair world, and considering the degree to which Ecuador is connected to the international financial system, I think it should have thought a bit more carefully about its foreign policy in the last year or so.

Ecuador, Venezuela agree to build biggest oil refinery in South America, and.... on the Pacific Coast!

Mercopress reports Rafael Correa, the Ecuadorian president, and Hugo Chavez, his Venezuelan counterpart, have entered into an agreement to build the biggest oil refinery on South America's Pacific coast.

Correa and Chavez

"Instead of having refineries in the United States, we decided to keep them here in our geopolitical context," Chavez said.

Chavez hopes to wean Venezuelan crude away from the US, where Venezuela currently runs seven refineries.

The joint 6.6 billion dollar project by state-run oil firms PDVSA, of Venezuela, and Petroecuador, of Ecuador, will refine 300,000 barrels of crude a day, saving Ecuador 3.0 billion dollars in oil imports a year, Correa said

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