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Monday, April 27, 2009

Ecuador's Borja:Won't Change Terms Of Bond Offer

By Mercedes Alvaro

QUITO (Dow Jones)--Ecuador's Minister of Economic Policy Coordination Diego Borja said Thursday that the government has no intention of changing the terms of its proposed global bond buyback.

Borja said at a press conference that the government wants to repurchase all of the outstanding Global 2012 and 2030 bonds and has the funds needed to purchase those bonds.

He also confirmed that Ecuador won't pay interest on its defaulted bonds.

Monday, Ecuador's government unveiled a plan to repurchase its Global 2012 and 2030 bonds with a floor price of 29.5% plus 50 basis points of the face value.

The administration of President Rafael Correa said it will offer a minimum of 30% to repurchase up to $3.2 billion of those global bonds. The repurchase will be done with a modified Dutch auction.

"I want to say to the international financial community that our offer is for 30 cents (on the dollar), and this price will remain. It won't be changed," Borja said Thursday.

Borja said that there shouldn't be any "speculation that the price will be increased."

He added that "the final price is not flexible" and that Ecuador has made the decision "to not pay more than 30 cents."

"Ecuador can cover the whole amount of retiring the 2012 and 2030 bonds at a price of up to 30 cents," Borja said.

Borja had earlier said that the cost for the repurchase could be around $900 million, which is included in the fiscal budget for 2009.

Some debt analysts say Ecuador may have repurchased some of its outstanding bonds before making the offer, something that the government has not confirmed.

Thursday Borja said that he wouldn't consider any possible buyback carried out by the government before its offer was announced to be unethical, but he wouldn't say if the government had done so.

He added that there have already been expressions of interest made to Ecuador's financial advisors about the proposal.

The government earlier defaulted on its debt saying the Global 2012 and 2030 bonds are "illegal" and "illegitimate" after an audit commission created by the government reached that conclusion.

Debt analysts have said that some bondholders could sue Ecuador, seeking to receive more for their bonds.

Borja said that he thinks that bondholders won't be able to bring together enough of them to sue Ecuador.

Borja said that the government was hoping for a "friendly" resolution to the debt problem but that if sued then it would defend itself in court.

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