Reserves fall US$152 million from Global 17 payment
Thursday, May 30, 2013
by: Pablo Wende
From a new debt maturity, the reserves fell yesterday another US$152 million and ended up at US$38.557 billion, the lowest level of 2013 and in reality the lowest registered since April 2007. It was not just another payment, as it corresponded to interest on the Global 2017, one of the warrants emitted under New York legislation and that is found in the middle of the litigation between vulture funds and Argentina.
Most of those dollars went abroad and didn’t have problems in their distribution. In December is the next interest payment, whose form of payment will depend on what the Court of Appeals in New York determines. It is estimated that at some point in June the court will rule. The next bond payments under foreign legislation correspond to the Par and Discount, which pay interest on June 30. In case the ruling is contrary or that it limits the role of Bank of New York Mellon as pay agent, these obligations would enter into a zone of risk.
With the new decrease registered yesterday, the stock of BCRA reserves accumulated a drop of US$4.733 billion for 2013 and is approaching a breach of US$5 billion, practically US$1 billion per month. The horizon is not very encouraging and all indications are that the negative trend will continue. In September, for example, the monetary entity will have to face the biggest payment of the year for US$2 billion, corresponding to the amortization of capital and interest of the Bonar VII. “If we hadn’t been paying debt since 2010, the reserves now would be above US$70 billion,” the explain on the economic team.
Even Ecuador will go back to placing debt this year
Thursday, May 30, 2013
(Reuters) New York - Ecuador is planning to emit sovereign debt, perhaps before the end of the year or in the first quarter of 2014, which would be its return to the international bond markets five years after it did not honor the payment of US$3.2 billion despite having the resources.
"Yes, we are working on that. We don’t exactly know in what month, but it could be even at the end of the year or the first quarter of 2013. Certainly, we have found great appetite for sovereign bonds,” said Ecuador’s ambassador in the United States, Nathalie Cely. "There are a couple of investment banks that have visited me in Washington to talk about that and to let me know that they are awaiting our bond initiative,” Cely said in a meeting with investors in New York. Cely said that the bonds will be denominated in dollars. She added that the details of the emission are not yet resolved, but she said that many banks have communicated with the government and that she is in direct contact with Credit Suisse on the issue.
The decision by Rafael Correa in December 2008 to not make payments on Ecuador’s sovereign debt denominated in dollars marked the second time in a decade in which the country didn’t honor its creditors. On the occasion, the president said that the creditors were “monstrous” and that the debt emitted by previous governments contained “illegalities”. Since the 2008 default, the financing by the OPEC member has depended on credits from China and other multilateral lenders.