Fitch rates Ecuador bonds B-

Fitch Ratings said it assigned a prospective B- rating to Ecuador's 10-year dollar-denominated bonds expected to be issued this week.

The outlook is negative.

Fitch revised Ecuador's outlook to negative in August because of increased political risk and related fiscal pressures.

If Ecuador is successful in placing $500 million to $750 million of bonds, this would help fund the central government's estimated $2.1 billion in amortizations and $570 million budget deficit in 2006, the agency said.

Repayments to private creditors increase to 40% of the total in 2006 from about 18% in 2005, so it is important that Ecuador return to capital markets in order to refinance these obligations, the agency said.

International reserves and bank external assets at year-end are estimated at just 54% of 2006 external debt service plus short-term external debt, making Ecuador's external liquidity among the lowest in the B category and leaving it vulnerable to external shocks.

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