Sunday September 26, 11:02 am Eastern Time

Ecuador announce Brady bond decision 0130 GMT

WASHINGTON, Sept 26 (Reuters) - Ecuador will announce whether it will meet next week's crucial $94 million Brady bond payment at 9:30 p.m. EST on Sunday (0130 GMT Monday), a spokesman for the Ecuadorean embassy said.

President Jamil Mahuad will make the announcement in Quito, and Finance Minister Alfredo Arizaga and Central Bank governor Pablo Better will speak at a news conference in Washington called for the same time, spokesman Jorge Saade said.

Ecuador faces a Tuesday deadline to cover a $94 million coupon payment that has already been deferred for a one-month grace period.

Ecuadorean authorities held last-minute meetings this weekend in Washington to try to work out a debt restructuring plan for the crisis-ridden Andean country.

Ecuador would be the first country in the world to restructure or default on Brady bonds, which were created to help Latin American countries resolve their 1980s debt crisis.

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Ray

-- Ray (ray@totacc.com), September 26, 1999

Answers

Thanks for posting this Ray. Important story to say the least.

And it has little to do with the 94 million. It has much to do with investor confidence. I have been watching several latinam currencies including the Columbian Peso which have struck me as being under considerable pressure. Me thinks that the Latinam block is probably on the BIG LEPER list. For what it's worth, I had heard through the vine that they (ecuador) would definitely default, but that was quite a while ago. I could see a white knight redefining this situation so that it doesn't look so bad. A gentle default so to speak.

For educational and research purps only. Sunday September 26, 1:39 pm Eastern Time Latam ministers brace for Ecuador default decision By Anthony Boadle

WASHINGTON, Sept 26 (Reuters) - Latin American finance ministers braced for an Ecuadorean default on its Brady bonds on Sunday, hoping the unprecedented move would not push up their borrowing costs.

Ecuador's President Jamil Mahuad was scheduled to announce at 9 p.m. local time (10 p.m. EDT) (0200 GMT on Monday) in a nationally broadcast address in Quito whether his government will meet a $94 million coupon payment that is due by Tuesday.

Mahuad's decision would depend on last-minute talks being held with bond holders in Washington by Ecuador's Central Bank governor Pablo Better, officials said.

The crisis-ridden South American country has been trying to restructure is Brady debt since deferring the $94 million payment for a one-month grace period in August.

Latin American financial authorities attending the annual meeting of the International Monetary Fund said markets have expected an Ecuadorean default for some time and the fall-out should be limited.

``The market today has discounted a default by Ecuador,'' Argentine Undersecretary of Finance Miguel Kiguel.

``Expectations are that Ecuador will not pay, so I don't think there will be any increase in spreads,'' he said.

Ecuador would be the first country to restructure or default on Brady bonds, which are themselves the product of a restructuring since they were created to help Latin American countries overcome their 1980s debt crisis.

Ecuador, slumped in its worst economic crisis in decades, has said it cannot service its $13 billion foreign debt which takes up more than half of its budget each year.

The IMF has given its nod of approval to Ecuador's attempt to restructure its private debt, which has drawn criticism of the fund that it is forcing creditors to take a ``haircut.''

The thought of a default on Bradys has sent shivers through Latin American markets, which are recovering only slowly from the Asian and Russian financial crises.

Latin American officials fear that an Ecuador default could taint their own Brady bonds, which have been the corner stone of their debt strategies, and hurt their access to credit.

Brady bonds, designed by former U.S. Treasury Secretary Nicholas Brady, are backed by U.S. Treasuries as collateral.

``We would very much hope to see a constructive solution that is market driven,'' said Mexican Central Bank governor Guillermo Ortiz.

``Although the implications for emerging markets and Latin America may not be very strong in the short term, I'm concerned about the quality of the whole asset class and the question of risk perception and access going forward,'' he said.

-- Gordon (g_gecko_69@hotmail.com), September 26, 1999.

Looks like their defaulting. Bad omen for tommorrow for certain.

For educational and research only:

Alert: Ecuador Will Pay Interest on Bonds With No Guarantee (Pdi Bonds)-Mahuad (Reuters) (This is a headline-only alert, although it will likely be followed by an article soon) - Sep 26 10:13 PM EDT

Alert: Corrected-ecuador Says Won't Pay Interest on Guaranteed Bonds (Brady Par, Disc) (Reuters) (This is a headline-only alert, although it will likely be followed by an article soon) - Sep 26 10:08 PM EDT

Alert: Ecuador Cannot and Will Not Pay Interest on Guaranteed Bonds (Brady Pdi)-Mahuad (Reuters) (This is a headline-only alert, although it will likely be followed by an article soon) - Sep 26 10:01 PM EDT

-- Gordon (g_gecko_69@hotmail.com), September 26, 1999.

9/26/99 -- 11:18 PM

Ecuador-Financial Crisis

QUITO, Ecuador (AP) - Ecuador will default on payment of millions of dollars of U.S.-backed debt, President Jamil Mahuad announced Sunday night.

Last month, Ecuador chose to delay its $98-million interest payment on its Brady bond debt for 30 days. It had until Tuesday to make the payment or officially become the first country ever to default on a Brady bond debt.

Brady bonds, named after former U.S. Treasury Secretary Nicholas Brady, were created to resolve the Latin American debt crisis of the 1980s. They are partly backed by U.S. Treasury securities.

In a nationally televised address, Mahuad said his nation would only pay interest on the bonds that are not guaranteed by the U.S. Treasury Department. He said Ecuador would pay ``a little less than half,'' of the $98-million interest payment.

International lenders and creditors have been fixated on Ecuador's economy.

Although the country does not rank among the region's largest economies, some fear a default on the once-sacrosanct Brady bonds could spark a tumble in emerging bond markets.

Mahuad asked international lenders and creditors for ``flexibility.''

Ecuador ``cannot pay its foreign debt on the terms that are currently presented,'' he said.

Ecuador had been working on proposals to restructure its entire Brady bond debt of $6 billion, and was preparing to present strategies for foreign debt restructuring this week during the annual International Monetary Fund meeting in Washington.

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-- Ashton & Leska in Cascadia (allaha@earthlink.net), September 26, 1999.

BAD NEWS !! Brazil too.

-- crash (default@bad.time), September 27, 1999.

Anyone for dominoes?

-- cody (cody@y2ksurvive.com), September 27, 1999.

Ashes, ashes, all fall down!

-- cody (cody@y2ksurvive.com), September 27, 1999.

cody, you took the words right out of my mouth -- dominoes are indeed going to start falling! And this time, I don't think that there are a lot of rabbits left to pull out of the hat, things are spread too thin. (But you never know....)

95 days.

-- Jack (jsprat@eld.~net), September 27, 1999.