Ecuador Defaulted Last Year. Now Its Bonds Are World’s Best – Bloomberg

Ecuador’s Bonds Are World’s Best

Across the world, government bondholders have seen losses pile up this year as a pickup in inflation and economic growth puts central banks under pressure to raise interest rates.

That makes even more remarkable the windfalls seen in Ecuador, a junk-rated South American nation that was mired in recession even before the pandemic and was forced to restructure $17.4 billion of debt last year — a step rating companies considered a default.

MARKETS: Ecuador’s Bonds Are World’s Best

Ecuadorian President Guillermo Lasso Takes Office

Guillermo Lasso leaves the National Assembly after being inaugurated in Quito on May 24.

Photographer: Johis Alarcon/Bloomberg

The returns on the nation’s bonds have topped 28% this year, more than any other country, according to a Bloomberg Barclays index. It’s the result of a confluence of factors: a steady vaccination campaign, rising oil prices and optimism that the April election victory of President Guillermo Lasso, a former banker, will usher in a wave of market-friendly reforms.

The gains stand in contrast to the experience of investors in other major Latin American countries that have seen political unrest or the rise of left-wing parties amid the economic toll of the pandemic. Neighboring Colombia this year was rocked by bloody protests over the president’s ill-fated tax hike plans. In Chile, a former student protest leader to the far left of the nation’s political spectrum is ahead in the presidential race. And Peru’s markets have been whipsawed as President Pedro Castillo, a former rural schoolteacher from a Marxist party, called for a new constitution and a briefly delayed the appointment of his finance minister. On Friday, Moody’s Investors Service downgraded El Salvador.

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International Business Consultant


International Business Consulting
MSc Econ Lassi Pensikkala International Business Consultant
MSc Econ Lassi Pensikkala International Business Consultant founder MSc Econ Lassi Pensikkala is the creator of hashtag #GoodNewsfromEcuador


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