Ecuador reaches provisional debt deal with bondholders

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The Ecuadorean government said on Monday it had reached an agreement in principle with some of its bondholders to restructure a significant chunk of its sovereign debt.

It said the agreement would give it debt relief over the next four years on over $10bn of its outstanding $17.4bn of sovereign bonds, and on a further $6bn between 2025 and 2030.

The deal would involve a 42 per cent reduction in Ecuador’s average contractual coupon rate to 5.3 per cent, a longer timeframe for payments and a nominal haircut for bondholders of 9 per cent, it said in a statement.

It did not say how many of its bondholders had provisionally accepted the deal but described them as “substantial international investors”, including funds managed or advised by Ashmore Investment Management and BlackRock Financial Management.

The government will now press ahead with a consent solicitation in the hope the bondholders formally accept the deal.

“Discussions are continuing with other bondholder groups,” the government said.

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