Torino Capital LLC , a New York-based investment bank, described as positive the result of the renegotiation of part of Ecuador’s public debt , as well as the new agreement with the International Monetary Fund (IMF) .
The financial entity stressed that the diagnosis is encouraging, both to meet the financing needs , caused by the health emergency of covid-19, and for the economic future of the country, which will change government next year.
The latest report from the firm highlights that “although the risk associated with political uncertainty persists , from Torino Economics we consider as probable that, given the financial relief implied by the debt restructuring achieved by the government of President Lenín Moreno , the resulting winner in the next elections will have the incentives to assume the commitments that are acquired, within the framework of the financing program agreed with the IMF ”.
That, he added, will also ensure the sustainability of the debt and the recovery of economic growth in Ecuador.
Analysts from Torino Capital conclude that the tax relief represents an urgent opportunity to meet, not only the most urgent needs such as labor liabilities , but also of a structural nature that can lay the foundations for the sustained growth of the economy in the medium and long term.
Regarding the renegotiation of global bonds , the study indicates that even though Ecuador still maintains inverted yield curves, they show a reduction in the same yields.
“This reflects a greater confidence on the part of the international markets , before the achievement of the negotiation process, both with the bondholders and with the preliminary agreement reached with the IMF,” the agency points out.
At its core, the investment banking study recalls that on August 31 last August, Ecuador successfully closed the renegotiation of its debt, officially issuing 3 new bonds for a total of $ 15,563.4 million.
Added to this is the issuance of a fourth PDI bond at 0% for a total of $ 1,005 million, for the interests accrued from March to August.
This issuance represents the effective closure of a negotiation process that began in April and that involved the exchange of 10 global bonds , totaling $ 17,375 million. The acceptance of the proposal was 98.5% of the creditors.
It concludes that this is the first time that the country has achieved the renegotiation of its debt, without falling into default since 1994. Another factor was, according to Torino Capital, Ecuador’s transparent approach to international markets.