Ecuador Debt Swaps Set to Pay $60 Million After Coupon Delay

Investors holding debt protection for Ecuador are in line to share compensation of about $60 million after the South American nation struck a deal with creditors to suspend coupon payments on its foreign debt, Bloomberg News reported. Firms holding the country’s credit-default swaps will receive about 65% of the amount covered by the instruments, according to the final results of an auction to settle the contracts on Tuesday. They get triggered when a borrower fails to pay its debt. Investors use the instruments to make negative bets on borrowers or as hedges for bond investments. Ecuador, which went 180 years without repaying a bond, has struck a market-friendly tone under President Lenin Moreno and his Finance Minister Richard Martinez, though it’s now grappling with both a public health crisis and a downturn in crude oil prices. The nation has been one of Latin America’s hotspots for the Covid-19 pandemic. Read more

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