When the doors of the international markets close to Ecuador to obtain financing, the Goldman Sachs window opens.
Last week the Ecuadorian government agreed to financing from the US bank. In general terms, Goldman Sachs disbursed 500 million dollars to Ecuador with an interest rate of 6.6% over four years. In return, the government delivered sovereign bonds for 1.2 billion dollars as collateral.
It is not the first transaction that the Ecuadorian Government subscribes with the financial giant. Since 2014, the country and Goldman Sachs have completed three operations that have included guarantees such as bonds and gold from the Central Bank reserves.
But why does Goldman Sachs lend money to Ecuador in difficult times?
Former Finance Minister Carlos de la Torre, who made one of the transactions with Goldman Sachs in October last year, assures that the entity facilitates this type of operations with the country because it is one of the main buyers of Ecuadorian bonds, as a holder and as an intermediary and is interested in giving peace of mind to its clients.
“Goldman Sachs has a particular interest with Ecuador. They are the main funders of the bonds that have been placed in recent years, “says De la Torre.
Another factor is that Ecuador was “good payer” of its first transaction of 2014, which ended last year.
From that perspective, the former minister explains, Ecuador is concentrating its financing with the entity. “This is not entirely healthy,” De la Torre adds.
Santiago Mosquera, professor of USFQ Business School, explains that the bank imposes high guarantees to try to cover itself before the worst scenario: a possible ‘default’. That’s why he asks for those guarantees.
Mosquera argues that Goldman Sachs economists are creative and offer financial products to governments that may have difficulties accessing markets.
“It is a specialized and much more creative investment bank,” says Mosquera.
For an economist of a New York investment fund consulted by EXPRESO, the operation with Goldman Sachs has divided criteria. For some it may be negative, but for others it is necessary because it bails the International Reserve.
Who won with the gold?
At the beginning of last year, the operation that involved delivering part of the gold from the Central Bank reserves generated debate about who won the most when it was concluded in February 2017.
At the end of the operation, as reported by the Ecuadorian Central Bank, Goldman Sachs delivered 14.3 million dollars for the gold invested for three years. While Ecuador paid 51 million dollars of interest for a loan of 400 million. (I)