(Bloomberg) — Ecuador’s dollar bonds jumped, leading gains among developing countries following the impending signing of a new financing deal with the International Monetary Fund.
Notes maturing in 2040 rose 2.5 cents on Tuesday to 50.4 cents on the dollar, the highest since June 2022, according to data compiled by Bloomberg. Debt due in 2035 rose 2.4 cents on the dollar to 54.4 cents, its highest level since January 2023.
“We are in very advanced discussions with the Fund and hope to make a positive announcement regarding the conclusion of a personnel agreement” in the short term, said Finance Minister Juan Carlos Vega on the sidelines of an event organized by JPMorgan Chase & Co. in Washington, D.C.
The South American nation has increased value-added taxes and pledged to cut spending to unlock multilateral loans as it grapples with a dual security and budget crisis.
Budget restrictions and expectations for IMF financing (President Daniel Noboa told investors in New York in early March that a deal was expected in about two months) have ballooned the country’s debt.
Read more: Ecuadorian bonds soar after Noboa tells investors an IMF deal is near
Ecuadorian bonds have offered investors returns of nearly 56% this year, by far the best among their emerging-market sovereign peers, according to a Bloomberg index. The extra yield investors demand to hold debt over U.S. Treasuries has fallen more than 840 percentage points this year to about 12 percentage points, according to JPMorgan data.
–With the help of Maria Elena Vizcaino and Zijia Song.
©2024 Bloomberg LP
