Ecuador Default Odds Surge as Virus Prompts Calls for Moratorium

Ecuador’s Congress called on the government to suspend debt payments to free up cash to deal with the coronavirus pandemic, prompting JPMorgan Chase & Co. to warn of a potential default as soon as Tuesday, Bloomberg News reported. The South American nation’s $3 billion of bonds due in 2028 fell 3.5 cents to a record low 31 cents on the dollar, pushing yields to 33%. Ecuador has about $320 million of debt due tomorrow and coupon payments later this week. Lawmakers from all major parties want President Lenin Moreno’s administration to prioritize the coronavirus crisis, rather than pay multilateral lenders and foreign creditors, according to a statement late Sunday. Ecuador had 981 cases of Covid-19 and 18 deaths at last count, only behind Brazil with the most cases in Latin America. “We think the government will feel intense political pressure to comply, putting tomorrow’s payments in doubt,” JPMorgan analysts Katherine Marney, Trang Nguyen and Ben Ramsey wrote in a report. Read more