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South American Defaulter Makes Triumphant Return To International Debt Markets

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Ecuador’s back, just six years after deciding its bills were illegal and illegitimate.

Ecuador sold $2 billion worth of 10-year bonds Tuesday, marking a return to international capital markets after defaulting in 2008. That deal came on the heels of Kenya's first-ever international-bond sale, which attracted $8 billion worth of orders for two chunks of bonds totaling $2 billion….

Ecuador's bond deal was bigger than expected—President Rafael Correa in April said he was anticipating a $700 million deal—and the final yield of 7.95% was below bankers' initial guidance, indicating strong appetite from fund managers.

Cyprus, too, just a year after getting its neighbors to pay its bills.

Cyprus is set to complete its return to the public debt markets Wednesday, just over a year since it needed a multi-billion-euro bailout to save it from exiting the euro zone.

The small Mediterranean island nation is seeking to borrow at least 500 million euros ($678 million) for five years, with bankers working on the deal suggesting that the bond will price to yield around 4.9%....

Pre-sale demand for the new five-year bond topped €1.5 billion, one of the banks said.

Argentina, on the other hand, is going to have to wait a little longer. But there’s good news: Yesterday’s Supreme Court “pay up, deadbeats” non-decision decision is the perfect time for the country’s return to its local debt markets to find a way to make good on its promises to listen to U.S. courts only when they say what it wants to hear.

The proposal last night by Economy Minister Axel Kicillof to swap securities subject to New York laws into local debt is technically difficult and of limited appeal for many holders of the restructured notes, analysts at Credit Suisse Group AG, Citigroup Inc. and Jefferies Group LLC said in reports….

Cabinet officials will meet with lawmakers today to discuss how to shift investors into local-law bonds, Kicillof told reporters last night. The government will also send lawyers to meet with U.S. District Judge Thomas Griesa in New York to discuss the ruling, he said….

An interest payment of $907 million on restructured notes is due on June 30. To avoid suspending payments, Argentina will ask bondholders to swap debt sold under New York law into securities governed by Argentine legislation and therefore not subject to U.S. court orders.

Ecuador, Kenya Government Bonds Entice Yield Hunters [WSJ]
Cyprus Returns to Public Debt Markets [WSJ]
Argentine Bonds Plunge as Government Proposes Debt Swap [Bloomberg]


By Leandro Kibisz (Own work) [Public domain or CC BY-SA 3.0], via Wikimedia Commons

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