The people of Ecuador are rising up to refound their country as a pluri-national homeland for all. This inspiring movement, with Ecuador's indigenous peoples at its heart, is part of the revolution spreading across the Americas, laying the groundwork for a new, fairer, world. Ecuador Rising aims to bring news and analysis of events unfolding in Ecuador to english speakers.

Sunday, July 26, 2009

Ecuador Had Liquidity Problems Due To Debt Repurchase: Correa

QUITO July 23 (Dow Jones)--Ecuador's liquidity problems in June and July were due to its repurchase of more than 90% of its 2012 and 2030 Global bonds, President Rafael Correa said Thursday.

"We had liquidity problems because of the repurchase of the debt," Correa said in a televised interview. "We repurchased 91% and that means that we had to spend $900 million in a few months, while we had budgeted $400 million."

On April 20, the government launched a modified Dutch auction for its defaulted 2012 and 2030 Global bonds and offered a minimum price of 30 cents on the U.S. dollar to repurchase those global bonds. But on May 26, it announced that it had set a price of 35 cents on the dollar.

Ecuador had three overseas bond issues outstanding: $510 million in bonds due 2012, which carry a 12% coupon; $650 million of 9.375% bonds due 2015; and $2.7 billion of 10% bonds due 2030.

According the government, it had spent about $900 million on the bond buyback and had repurchased $2.9 billion worth of the debt.

Correa said that amid the liquidity problems there were some delays in the payment of public sector wages.

The meager liquidity available to the country, as well as the limited sources for external financing, which has been reduced to mainly regional multilateral lenders, will be a deciding factor in a decline in Ecuador's economic activity, analysts say. However, Ecuador's government has forecast gross domestic product growth of around 2% this year.

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