Ecuador successfully completes consent solicitation for 10 bond issues

Chicago, April 17 – The Republic of Ecuador announced that it has received the requisite consents for its consent solicitation to amend the indentures of 10 series of notes to provide short-term relief from financial obligations while the government takes steps needed to address its unsustainable debt burden, according to a news release.

The consent solicitation expired 5 p.m. ET on April 17, and percentages of consents of aggregate principal amounts of the following series of notes were received:

• 90.84% of the $2,378,860,000 of 10¾% notes due March 28, 2022 (ISINs: XS1458516967; XS1458514673);

• 95.58% of the $1,797,499,000 of 8¾% notes due June 2, 2023 (ISINs: XS1626768656; XS1626768730);

• 90.01% of the $600 million of 7 7/8% notes due March 27, 2025 (ISINs: XS2058848826; XS2058845210)

• 92.56% of the $2,402,870,000 of 9.65% notes due Dec. 13, 2026 (ISINs: XS1535072109; XS1535071986)

• 89.28% of the $1 billion of 9 5/8% notes due June 2, 2027 (ISINs: XS1626529157; XS1626530320);

• 91.67% of the $2.5 billion of 8 7/8% notes due Oct. 23, 2027 (ISINs: XS1707041429; XS1707041262);

• 88.78% of the $3 billion of 7 7/8% notes due Jan. 23, 2028 (ISINs: XS1755432363; XS1755429732);

• 93.08% of the $2.125 billion of 10¾% notes due Jan. 31, 2029 (ISINs: XS1929377015; XS1929376710);

• 91.13% of the $1.4 billion of 9½% notes due March 27, 2030 (ISINs: XS2058866307; XS2058864948); and as part of a second consent solicitation; and

• 82.24% of the $2 billion of 7.95% notes due 2024 (ISINs: XS1080331181; XS1080330704).

As previously reported, the proposed amendments will defer interest payments occurring for those securities between March 27 and July 15 and will reduce the interest by US$0.50 for each US$1,000 principal amount of notes until August 2020.

The amendments will also exclude from default or cross defaults arising from defaults under the 4 5/8% notes due 2020 issued by Empresa Publica de Exploracion y Explotacion de Hidrocarburos Petroamazonas EP, the 7¼% social housing notes due 2035 and any series of securities for which the amendments do not become effective, and any other external debt consisting of loans from creditors other than multilateral creditors in a principal amount that does not exceed $300 million, and defaults arising from judgments or arbitral awards being entered or issued against Ecuador under the instruments involved.

The August date will be Aug. 15, or Aug. 10 if a staff level agreement on a new successor International Monetary Fund supported program has not been publicly announced in accordance with IMF policies by Aug. 10.

Ecuador remains vulnerable to external shocks due to its weak fiscal position, lack of economic buffers and limited monetary tools.

The outbreak of the Covid-19 crisis and the significant drop in the export price for Ecuador’s crude oil during the first quarter have compromised severely Ecuador’s ability to meet its obligations with all of its stakeholders, according to the news release.

The proposed amendments are a first step intended to allow Ecuador and the holders of the securities as well as other creditors, including the IMF and other official sector creditors, to engage in a negotiation intended to create new and appropriate conditions of sustainability for Ecuador's debt burden.

Only holders that held the securities as of 5 p.m. ET on April 7 were able to participate in the consent solicitations.

Each consent solicitation was being made on the terms and subject to the conditions set out in the related consent solicitation statements.

Ecuador is offering to pay a fee of $0.50 for each $1,000 principal amount of securities of a series only to holders who validly delivered consent and only if the related supplemental indenture and the amendments become effective with respect to that series of securities. Holders who did not deliver valid consents will not receive the consent payment even if the securities are amended.

The proposed amendments will become effective after the consent payment has been paid.

Citigroup Global Markets Inc. (212 723-6106) is the consent solicitation agent, Global Bondholder Services Corp. (212 430-3774) is the information and tabulation agent, and Lazard Freres (212 723-6106) is acting as financial adviser to Ecuador in connection with the consent solicitations.

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