Ecuador extends deadline for negotiations with bondholders
Ecuador will extend the deadline for creditors to vote on its US$ 17.4 billion debt restructuring plan to Monday following a lawsuit by a small group of bondholders, the finance ministry said on Thursday.
Ecuador originally said the vote would end this Friday, but pushed the deadline back at the request of the U.S. Court for the Southern District of New York following a suit by investment funds Contrarian Capital Management and GMO.
In an act of good faith, Ecuador agreed to extend by 24 business hours, the closing of the vote, the ministry said in a statement. The voting process is ongoing and continues positively, with a high probability of reaching the necessary consent, according to preliminary reports.
Contrarian and GMO said the government’s offer to swap 10 sovereign notes for three new bonds maturing in 2030, 2035 and 2040 was coercive.
Ecuador’s government says the investors who object to the proposal hold a minor fraction of total outstanding bonds.
We will defend the interests of Ecuadorians and we will not allow an isolated group of holders, with a small position, to try to economically and socially harm the country, Economy Minister Richard Martinez said in the statement.
Ecuador’s plan has the support of its largest creditor group, which holds over 53% of outstanding sovereign bonds and includes asset managers such as AllianceBernstein, BlackRock and Ashmore.
Other creditors in recent weeks have pushed for better terms. They include Contrarian, Amundi, and T Rowe Price Associates, and represent more than 25 institutional investors. They have not said how much of the total outstanding bonds they hold.
For the proposal to go forward, Ecuador needs approval from investors holding 66% of the outstanding issues and 75% of the notes that mature in 2024.