Crude oil prices pushed down Ecuador’s country risk
Posted On 12 Dec 2016
On November 28, Ecuador reported a country risk of 735.00 points; the lowest rate recorded during the last quarter of the year.
According to the Central Bank of Ecuador (BCE for its Spanish acronym), this indicator, which measures the perception of markets on the ability of a country to pay or not the external debt, had its highest peak on November 14, when it rose to 849, 00. Then it dropped to 747.00 on the 21st of this month until the closing.
One of the factors markets take into account to set the country risk is the evolution of oil prices at international level, something that has been benefiting the country. Just this week the light sweet crude (WTI), a benchmark for Ecuador, closed at $ 51, the highest price recorded in the last year and a half.
For some investors, if the price of oil falls, any state that depends on this product would be left with no income and, therefore, difficulties to honor their debts.
This index is given despite a difficult economic context. Only last week, Ecuador again resorted to the capital market in search of $ 750 million. This is the third issue made by the national government since July of this year. That month, the first $ 1 billion came at a rate of 10.75%, with a term until 2022.