Ecuador is willing pawn in Argentina debt standoff

Ecuador on July 20 released its official exchange offer for around $17.4 billion of external bonds on July 20. It said on July 6 that it had reached agreement in principle on the proposed restructuring terms with a major group of creditors including BlackRock, AllianceBernstein and Ashmore.

These creditors together hold over 53% of Ecuador’s total outstanding sovereign bonds and around 50% of almost every individual bond series, according to their July 20 statement in support of the deal. In Ecuador's offer, 10 bonds maturing between 2022 and 2030 would be exchanged for three bonds due in 2030, 2035 and 2040 and a past-due interest bond maturing in 2030. The deal would provide over $10 billion of debt relief over the next four years and $6 billion more between 2025 and 2030. The creditors would take a 9% haircut on their holdings. The deadline for the offer is July 31.

On July 13, a steering committee representing other creditors, including more than 25 institutional investors and a group of holders of bonds maturing in 2024, urged Quito to improve its tentative terms and released a counterproposal. These groups also rejected the official exchange offer on July 20.

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