Moody’s downgrades Ecuador, view to stable

Moody’s Investors Service said it downgraded the long-term foreign-currency issuer and senior unsecured rating of the government of Ecuador to Caa1 from B3 and changed the outlook to stable from negative.

In explaining its rationale, Moody’s cited market access for the sovereign is likely to remain constrained ahead of a challenging debt amortization schedule beginning in 2022.

“The authorities are facing considerable resistance to the adoption of urgent reforms, which has led to policy uncertainty and hindered economic growth, in addition to adding further challenges to debt sustainability and market access,” Moody’s said in a press release.

The stable outlook captures the authorities’ intentions to maintain their efforts aimed at achieving further, gradual, fiscal consolidation and that risks to debt repayment remain contained in 2020-21 given an absence of large amounts of maturing market debt.

Concurrently, Moody’s affirmed the long-term foreign-currency senior unsecured rating for unrestructured debt at C, pertaining to the about $52 million (including accrued interest) of the 2030 global bonds that have been in default since 2008. Moody’s also changed Ecuador’s long-term foreign-currency bond ceiling to B3 from B2.

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