Ecuadorian Economy Minister Richard Martinez clarified on Friday the questioned settlement this year of two operations contracted in 2018 with Credit Suisse and Goldman Sachs and ICBS Standard, for a total of $ 1 billion.
In a virtual appearance, Martínez argued that although the operations were canceled last April, the resources for their liquidation had already been discounted previously between November 2019 and March 2020, in the form of amortizations and margin calls.
The financial portal Bloomberg published an article on Thursday that revealed that Ecuador had paid that amount in April as external debt to Credit Suisse and Goldman Sachs.
In this regard, Martínez explained that this endowment was destined to cancel two repo or Repo operations contracted in 2018 in an economic context different from the current one and in order to guarantee “the sustainability of the debt.”
This type of operation consists of the sale of bonds at a certain value, with the agreement to buy them again within a fixed period.
“These are operations that are carried out all over the world, there are countries and investment banks with which they are carried out,” said the minister, before specifying that “in 2018 the market conditions were very adverse.”
He assured that if today the situation had not stagnated due to the COVID-19 pandemic and the fall in the price of oil, Ecuador would have continued the process until the end and bought back the bonds.
In line with the decision, he argued that with it, it was avoided generating a capital loss to the Ecuadorian Republic and advancing the request for consent for the deferral of interest and renegotiation of the country’s external debt (sovereign bonds), without entering into formal default.
In April 2020, Ecuador’s bondholders gave their consent to the Ecuadorian proposal to defer interest payments from March 27 and July 15, 2020 to the last quarter of the year and even to 2021.
Said action, according to Martínez, reflects the support of the investor community to the Ecuadorian Government and its approach to face the health crisis and the fall in the prices of crude oil, the main export product.
“There is a credibility gesture with the country and that confidence gesture is reinforced in that the Ecuadorian debt creditors transfer the debt payments in very small amounts to the next Repo year,” he concluded.