The government intended to rely on multilaterals, global markets, and domestic debt to cover its 2022 financing needs, but the oil rally bridged most of the fiscal gap.

2023 will be a mountain to climb as Ecuador will conclude its IMF program in December 2022 and the country has lost market access due to its high credit risk.

Considering the initiatives to be submitted to the National Assembly and the upcoming regional elections, we believe that the political landscape will remain a source of risk.

Finance Minister Pablo Arosemene is actively seeking new multilateral loans, and while he has not ruled out a new placement o...

President Lasso’s administration has faced broad opposition from the National Assembly and fiery protests that have stopped his economic plans on their tracks.

The election of a new National Assembly bureau led by the indigenous movement and Correísmo could inflame tensions further while reducing governability.

While we do not expect the dissolution of the Assembly in the short-term, tension will grow if the government submits the labor or investment reforms to the Assembly.

USD 230 mn in lost oil revenues and a new expenditure package will impact the country’s fiscal position. We expect a global surplu...

The government of Guillermo Lasso was forced to approve a package of expenditure measures in response to CONAIE’s demands.

We believe this package will add USD 763 mn, or 0.7% of the GDP, in extra expenditure this year.

The government cut fuel prices by ten cents, which will increase fuel subsidies by USD 245 mn.

Although the IMF program does not formally include the reduction of fuel subsidies, it was one of the measures proposed to cut expenditures and offset the non-adjustment of the VAT. 

BUY: Ecuador continued to plummet as dialogue breaks down despite the failure of an impeachment vote in the nation...

Eurobonds have lost between 10-14 pts in June, as Ecuador underperforms comparables due to nationwide indigenous protests. The yield on ECUA 5% 30 has soared by 409 bps.

So far, CONAIE has ignored Lasso’s calls for dialogue, despite the latter making several social policy concessions to appease the protestors.

Fiscal fundamentals, as well as solvency and liquidity ratios, remain strong thanks to the tailwind from international oil prices.

The president can afford to backload adjustment to appease social discontent with the sight on restoring political stability.

The Armed Forces supported Lasso, describing pro...

Nationwide protests erupted on Monday and have intensified after the arrest of Leonidas Iza, head of the indigenous confederation (CONAIE).

While Iza has already been released, CONAIE is calling for no retreat.

So far, the Ecuadorian commercial sector has reported USD 26 mn in losses due to the blockade of 87 roads.

Guadalupe Llori is no longer the president of the National Assembly after a controversial removal process with plenty of irregularities.

The removal of Llori will bring greater power to the opposition forces, as she was a roadblock to several of their initiatives.

UNES, PSC, and the radical wings of Pachakutik and the Democratic Left were crucial to the success of the removal.

Although this group has not become an official block, we expect them to keep blocking the government’s agenda.

Virgilio Saquicela (independent) assumed the presidency of the Assembly, while PSC and the radical wing of Pachakutik will fig...

Modifications introduced in the recent tax reform represented around 0.3% of the GDP in additional tax revenues in April, showing a historic high in tax income collection.

Likewise, oil revenues have increased 64% in YoY terms for the first four months of the year.

Authorities decreased their official estimation of fiscal deficit from 2.7% to 2.2%, while President Lasso ensured that it would be even lower.

Nevertheless, higher oil prices represent a burden on expenditures, as oil subsidies have grown since president Lasso froze fuel prices in October 2021.

The government is still struggling to meet IMF targets.

On the last day of discussion before its automatic approval, the National Assembly decided to archive the investments law draft.

As time goes by, political parties are setting strong positions on the government’s initiatives and clearing any doubt that they will keep blocking them.

To call for an Assembly dissolution is attractive, nevertheless, it would also imply calling elections for the Legislative and Executive powers.

Lasso’s government is not strong enough to face elections once again, therefore, there are considering other alternatives such as presidential decrees and popular consultation.

Our co...

On February 24, the pressure cooker exploded and Guadalupe Llori, president of the National Assembly, had to leave the room amidst shouting and threats.

Pachakutik, the indigenous movement party of which Llori is a member, has split between a radical wing and a more establishment-friendly one.

The radical wing is formed by at least 11 assembly members that have aligned with the correísta block, putting the new group within reach of a parliamentary majority.

All of this happens at a key time for parliament, as it must discuss the new investments law before March 24. Otherwise, it will go into force automatically.

President Lasso is in China, seeking to reschedule upcoming debt payments amounting to half of the external debt service and 10.6% of Ecuador’s financing needs for 2022.

The debt owed to Chinese creditors, as of November 2021, amounts to USD 4.9 bn or 4.4% of the GDP, 70% of which will finally mature between 2024 and 2026.

Authorities also have the objective of decoupling the oil shipments from the oil-backed debt owed to China and simplifying the price formula.

The current price formula yields losses of USD 3.6 per barrel, according to Petroecuador.

In 2021, the oil shipments to China represented around 30% of to...

President Guillermo Lasso has seen his popularity fall as he faces strong opposition from the indigenous movement and a fractious national assembly.

The government will find it hard to introduce its preferred policies, such as the labor reform and opening up mining and oil projects to foreign investment.

The recent approval of the tax reform together with a higher oil price will boost the country’s fiscal revenues.

Nonetheless, we expect a moderate economic growth of 2.1%, which will hurt public revenues and limit expenditures.  We also forecast a fiscal deficit of 3.5%.

BUY: Given the limited rollover ri...

Damaged infrastructure has disrupted Ecuador’s oil production once again, forcing oil companies to pause transport activities through pipelines since December 8.

The two main pipelines of the country jointly transport 95% of total production, and the recent problems have severely damaged production.

We estimate that total losses will amount to around 0.9% of the GDP, considering that authorities estimate that output will return to pre-crisis levels by February 2022.

The government will try to compensate for these losses by accelerating investments in the oil sector.

The discussion of the 2022 budget continues in the National Assembly, with the congressional opposition demanding more spending on health and education.

Our estimates suggest that the fiscal deficit will reach 3.4% of GDP, even considering the revenue-boosting tax reform and further cuts in expenditures.

The government expects to collect USD 985 from sales of non-financial assets, but this has been a pending challenge since Moreno’s government.

Gross financing needs will be an astonishing USD 11 bn (10.8% of GDP) next year, according to Treasury estimates.

The government expects to cover its deficit issuing do...

Concern for the approval of the IMF-backed reform agenda increased following the fallout between the National Assembly and Lasso’s administration over the 2021 budget.

There are 16 structural benchmarks to be reached to complete the IMF program, with one representing 2.3% of the GDP in revenues and savings: the tax reform.

The tax reform, submitted last Thursday, has a better chance of approval than the 2021 budget, as it was drafted with the involvement of Pachakutik and Democratic Left.

The tax reform will not be enough to meet the IMF’s original goal. The government has focused on expenditure cuts, but the ...

On September 21, the government’s budget draft was rejected by the National Assembly. On October 4, the same draft was resubmitted.

The government’s budget plan would have come into effect after the second submission, as a supermajority in the National Assembly was needed to overwrite it.

But since parliament accused the government of breaching a legislative deadline, it ended up blocking the new 2021 budget and extending the 2020 budget instead.

Given the reforms needed as part of the IMF program, president Lasso will need to rebuild his relationship with the National Assembly to avoid a legislative blockade ...

In August 2020, Ecuador reached an agreement with the International Monetary Fund (IMF) for a USD 6,500 mn Extended Fund Facility (EFF).

A staff-level agreement to modify the EFF’s terms was reached this month, unlocking USD 800 bn in a new disbursement.

President Lasso stated that the IMF EFF-related transfers would be enough to cover most of the country’s financing needs for 2021 and 2022.

Guillermo Lasso is still enjoying a happy honeymoon, with approval ratings sky-high due to a successful vaccination program.

As expected, Lasso is emphasizing supply-side reforms over potential tax hikes or other revenue-enhancement measures.

Lasso plans to double oil production over his 4-year period to 1,000 tbd from the current 493 tbd. The target is to raise production by 40 tbd (8%) by the end of the year.

There is also an emphasis on growing mining exports, which are expected to rise about 74% to USD 1.6 bn from USD 921 mn in 2020. 

Lasso’s big bet on oil and mining is set to influence his approach ...

New authorities have succeeded both in controlling the spread of the virus and in deploying a massive vaccination plan.

The 7-day average of new cases went from 2,273 on April 5 to 277 by August 18.

The 100-days plan outlined by President Lasso has paid off and 56.5% of Ecuadoreans have received at least one dose (up from 9.1% before the plan was put in motion).

Guillermo Lasso issued Decree 95 reforming the oil sector last week, as the government aims to double oil production in the next five years.

The highlight of the decree is the revival of “participation contracts”, which might increase the attractiveness of the industry to foreign investors.

According to the Oil-Energy Coalition, USD 10 bn in investments are required to double production to a million barrels per day.

It will take some time to update the rest of the legal framework and a lot of effort to convince investors given the expected local indigenous resistance to the reform.

HOLD: Ecuador is slowl...

Ecuador has been waiting since April for the second disbursement from the IMF, equivalent to USD 400 mn.

According to our estimations, all of the goals set for the first four months of the year were met; so the delay is likely related to Lasso’s intentions to modify it.

Lasso has reiterated that he would not raise taxes, instead, he is pushing for the removal of distortive taxes and for a pay raise for teachers.

The measures would add around 3% of the GDP to the fiscal deficit.

HOLD: Mixed signals coming from Lasso’s administration on the fiscal front, along with large gross financing needs, are dampenin...

Mercedes Llori, from Pachakutik (indigenous left), was elected as the new president of the National Assembly with the support of CREO (center-right) and the Democratic Left (center-left).

The PSC-CREO alliance was dissolved after CREO did not support PSC’s candidate. The PSC (conservative) said that this was a violation of an agreement also signed by UNES (far-left).

Llori declared that she will guarantee governance and stability to the new government, pointing to minimum agreements for the next 100 days.

There are important ideological and political differences between the parties, so we view this alliance as tempo...

President-elect Guillermo Lasso takes over in a month, and the focus has moved from his surprise victory to the governance issues he might face.

The President of the National Assembly will be a key player. We believe the center-left parties are the frontrunners for the post.

Lasso’s first test will be to secure financing for the rest of the year, while figuring a way to face expensive campaign promises such as the minimum wage raise.

He has also promised zero deficit in four years, which would require austerity measures which were not openly discussed during his campaign.

HOLD: After the massive post-election ...

Guillermo Lasso won Ecuador’s presidential runoff, with the pro-market businessman receiving 52.4% of the valid votes compared to 47.6% for far-left economist Andrés Arauz.

Lasso was widely considered an underdog, but a late surge in the polls pushed him over the top. This was his third presidential campaign.

Blank and null votes accounted for 16.3% of the total (with 98.8% of the votes counted), after supporters of the indigenous movement promoted this option.

Lasso faces big challenges ahead. He will inherit a weakened economy and the need to form alliances to pass laws in the divided National Assembly.

With Andrés Arauz’s favorite for the April 11 runoff, we take a deep dive into the main economic policy risks associated with a potential return of correísmo.

Arauz proposes boosting aggregate demand with central bank financing of government spending. Contrary to popular misconception, dollarization does not completely prevent this sort of operation.

Nonetheless, a disorderly expansion of the central bank’s balance sheet could quickly compromise trust in dollarization and the stability of the domestic financial system.

To counterbalance expansion of central bank domestic liabilities, Arauz propos...

A key reform to the Monetary Code that is necessary to unlock the IMF’s second disbursement has been rejected two times in the early stages of the legislative discussion.

This is somehow surprising, given that the reform shouldn’t be too controversial and assembly members in charge of pre-approving it belong to parties that support the IMF program.

The law aims to strengthen central bank independence, prohibit central bank financing of the government, and improve confidence in the dollarization.

Even if the law is cleared for discussion in the plenary, it is still unlikely that it would be passed before the de...

Commodity prices have performed spectacularly after the chaos of March 2020: Precious metals (+ 25%), Gas (+ 66%), Oil (+ 254%), Copper (+ 93%) and Coal (+ 74%)

Some short-term conditions such as the stimulus packages of the main economies, inflationary risks and the weakness of the dollar promote a rise in real assets

Increased industrialization in India and the maintenance of government spending at high levels, support the boom in the long term

For now we know that there is a rise in prices, but there is no certainty that there will be a supercycle of several years because all the long-term factors are variable

Of...

In November 2020, the G20 countries and the Paris Club agreed on a common framework to deal with LICs with debt problems

The common framework seeks to provide more comprehensive support that goes beyond the pandemic shock

The key differences with the DSSI are that it has no time limitations, and requires both private sector involvement and IMF engagement

Guillermo Lasso made a comeback and is now winning the race for second place, receiving 33,656 votes more than Yaku Pérez with 99.99% of votes processed.

There are only 4 additional electoral records to process, alongside another 124 contested records.

Yaku Pérez is demanding a recount in sixteen provinces, and held a televised meeting with Lasso and members of the electoral commission to discuss the terms of this request.

Andrés Arauz won the first round of the presidential elections by a large margin.

His ballotage opponent will be defined in the next few days, given that there are 4,025 electoral records to be reviewed. It is likely to be Yaku Pérez.

The two surprises of the election night: the 12 p.p. of advantage of Arauz over the runner-up and the impressive performance of dark horse candidate Xavier Hervas.

Correísmo will be the dominant force in the National Assembly, followed by the indigenous movement.

Pérez might be the lesser evil if he makes it to the ballotage, as Arauz would be even worse new...

Bonds are trading on average 6.5% down against Friday in a range of 43 to 59 cents on the dollar, and yielding between 11.9% and 15.3%.

The government is fiscally constrained by external financing and does not face the same threat of sudden collapse as some of its peers do.

The next administration will only have to pay USD 457 mn per year on average on its Eurobonds, around 2.2% of Ecuador’s exports or 1.3% of its fiscal revenues.

At current prices we think the bonds appropriately compensate investors for the risk of a second restructuring, but not with a large margin.

According to CEDATOS’ latest survey of, 47.9% of voters remain undecided.

With elections this Sunday, Lasso is ahead by a margin of 0.7 p.p., within the poll’s margin of error.

It is reasonable to be concerned (to say the least) at this point with Arauz gaining ground in the last few weeks.

A run-off is a fact, with a second round that seems up for grabs.

General elections are scheduled for February 7. We believe that elections are a toss-up and will go to a run-off after a close Lasso win in the first round.

If Lasso wins, the non-financial public sector fiscal deficit would be cut from 5.4% of the GDP in 2020 to 2.5% of the GDP in 2021.

There will not be a 2021 budget until the new president takes office.

We expect that GDP will grow by 5.9% and deflation will smooth to -0.1%.

BUY: Electoral uncertainty has affected pricing significantly, and could weigh until we get the results of the first round. Looking beyond the electoral horizon, we favor the ECUA 0.5 2030  ...

ARGENT and ECUA bonds have faced a rough patch, but only ARGENT seems to have touched rock bottom.

Caution is the path to follow with both curves, but ECUA has a lot more ground to lose in case of setbacks.

ECUA prices reflect uncertainty over the upcoming presidential elections, but a victory from Correísmo in the first round could push them further down.

ARGENT bonds face a myriad of challenges, but a low cash price and yields exceeding 15% more than compensate the risks

Emerging markets faced massive capital flight as a result of the COVID-19 crisis.

However, there has been debate as to whether the severe initial shock was primarily the result of an interruption in liquidity flows and not the deterioration of macroeconomic variables.

Growth in emerging economies may have taken a permanent hit but, at the same time, emerging markets could become more attractive to those hunting for yield.

We believe that the deepness of the impact of the pandemic on EMs can be quantified.

GDP contracted 12.4% y-o-y in the 2Q20, the biggest quarterly drop in 20 years.

Deflation started in July in y-o-y terms and reached a historical minimum in October with -1.6%.

The silver lining is that the non-oil trade balance yielded a surplus for the first time in 20 years

International reserves grew by 60% in October, thanks to the IMF disbursement.

We take a comprehensive look at political risk indicators in a group of Emerging Market countries, trying to identify potential sources of conflict.

We analyze the electoral scenarios in the four Latin American nations that will have electoral processes during the end of 2020 and all of 2021.

We review the scenarios in the parliamentarians of Argentina and El Salvador, we comment on the electoral process that will take place in Venezuela, and we review the perspectives of the presidential elections in Ecuador.

We evaluated the World Bank’s governance indicators for our sample countries in 2019 and share our view of thes...

A new prepaid oil loan with Chinese multinationals has been in the works since late 2019.

The deal hasn’t been signed as oil production has decreased, making it difficult for Ecuador to meet its past commitments, let alone this new one.

In September, the oil shipments required to service previously contracted loans represented 68% of oil production and 92% of exports.

Oil shipments tied to debt service in 2021 will be equivalent to 190 tbd, 45% of September exports.

While uncertainty about the outcome of the elections in the next year increases, Ecuador’s curve continues to invert.

Scholarly research shows that domestic debt grew as a share of total debt in EMs during the first decade of the century, but defaults on domestic creditors still decreased significantly.

A default to domestic investors usually carries a higher political and economic cost than a default to foreign investors.

Domestic debt is usually concentrated in local financial institutions, such as banks, insurance companies and pension funds.

Historically, polls in Ecuador tend to have average error margins surrounding the 3 pp.

Being 3 months away from presidential elections can increase the error margin against the final results, as our historical comparison shows.

Current vote intention levels for each candidate, amongst the different available polls, show high dispersion levels.

Adding high levels of undecided voters to our accuracy assessment, we believe any poll-induced movement in the sovereign curve may be deemed as premature.

Both Argentina and Ecuador have been underperforming after their restructuring, with Argentina suffering significantly more.

At this point, given the significant increase in the spread between both curves, we still think both credits are cheap, but find Argentina more attractive. 

In our view negative factors in Argentina such as a problematic official devaluation, inflation, increased strain on skinny reserve buffers are all already discounted in current prices.

On Argentina, we think much of the pessimist expectations on the Fernández administration’s policy-making are already priced in, leaving room f...

In the new EFF program, the IMF will push for a fiscal reform that aligns Ecuador with its regional peers.

In Ecuador, tax revenues represent 12% of the GDP, compared to the Latin America average of 18%.

Ecuador’s VAT (12%) is the second lowest in the region, only behind Paraguay’s (10%). The average is 14%.

Only Bolivia is above Ecuador in total expenditure, with 35% and 27% of GDP, respectively.

The IMF wants to increase the VAT rate up to 15% until end-September 2021 and reduce wage bill in the middle-term.

We maintain our view that the risk/return on the bonds is attractive, and favor ECUA 0.5 ...

The COVID19 crisis could open the door to new sovereign restructurings

In the last decade, sovereign default events carried out for political reasons have increased by 50%

Suriname and Ecuador, with previous complications, this year saw their position even more deteriorated due to the COVID19 crisis and announced restructuring

On the horizon El Salvador, Angola and Sri Lanka are the countries that generate the most concern of those followed by EMFI

An imminent alliance was formed by the center-right parties PSC and CREO.

The electoral body finally officially confirmed that Correa will not participate.

None of the candidates has an absolute majority (over 50%), so at this moment it looks like we will have a second round.

Part of the review process of the IMF consisted of interviews with all the presidential runners.

Guillermo Lasso would be the most market-friendly option, but from these initial declarations, it looks like Arauz is trying to soften his image.

With the restructuring operations in Argentina and Ecuador having finally settled, we look into the new bonds in search of attractive investment opportunities.

Low coupons in relation to yields result in very low cash prices, which makes both sets of bonds attractive versus other comparable sovereign bonds.

There is a distinct lack of carry, but it is offset by a very strong pull-to-par effect, which means that bond prices can rise very quickly.

In Ecuador, we find a very compelling combination of high potential returns if yields compress and limited downside if they deteriorate, which makes the credit a strong BUY f...

Pressure grows on China, as one of the world's main creditors, to enter the DSSI without restrictions

The terms of China's agreements with emerging or frontier nations are extremely aggressive compared to members of the Paris Club

One issue to keep an eye on is the participation of Chinese state banks in the renegotiations, as these entities hold about 75% of the country's total debt

Chinese authorities have spoken with 20 countries about the DSSI, and it has approved relief for an amount close to USD 3 bn for 10 countries

Angola and Zambia are the countries that most urgently need to address a restructu...

Despite that oil production has rebounded and oil prices have recovered some ground as well, current oil revenues are far from enough to offset the damage done in the previous months.

We expect the fiscal deficit to be USD 7.0 bn (7.3% of GDP), with a primary deficit of USD 5.1 bn (5.3%).

With amortizations equal to USD 4.1 bn, financing needs are equivalent to USD 11.2 bn, representing 11.6% of GDP.

As of July, the government has covered 41% of the financing needs through multilaterals disbursements and domestic financing.

With the pending disbursements from the IMF, that amount to USD 4 bn, and if the government f...

Ecuador’s primary elections finally ended yesterday with the presentation of the 18 presidential candidates together with their running mates.

There will be many underdogs in the contest.

The only familiar faces are Guillermo Lasso for president and Rafael Correa for Vicepresident.

There is a long way to go until February 7 and anything can happen. However, at first sight, we don’t believe an AP reelection is likely.

According to the electoral organism (CNE), the primary elections will be held between August 9 and 23.

The only political party that has already defined its candidate is CREO (center-right), with Guillermo Lasso confirming that he will be running for the third time.

The ruling party Alianza País (AP, center) has not confirmed its candidate yet, with former VP Otto Sonnenholzner being the person best positioned to run as a continuity candidate.

If he ends up running, Sonnenholzner will have to put more effort into distancing himself from Moreno, as the latest CEDATOS poll shows the president’s approval rate at...

Standstills have been the talk of the town since March, but only Ecuador, Suriname and Belize have used them so far.

We look at the similarities and differences between the three cases in order to understand what each country intends to do with them.

BUY Ecuador: Restructuring negotiations are already very advanced and we think the bonds will have significant upside after a deal is closed.

SELL Belize: There is willingness to continue paying after the standstill, but their repayment record speaks for itself.

HOLD Suriname: The outgoing administration negotiated a standstill on their 2023 bond, but we don’t kno...

On Monday 13, two large bondholder groups – which are in control of blocking positions – issued a joint counter-proposal to Ecuador’s opening bid.

The counter-proposal involves a higher face value haircut but conditioned to an IMF agreement. It also involves a more front-loaded interest payment schedule.

Our estimates indicate that Ecuador would have to pay an additional USD 1.87 bn between 2022 and 2027 under the counter-proposal, but would have to pay USD 561 mn less afterward.

We think that the counter-proposal is broadly reasonable and the 2025 and 2030 targets for GFN and debt-to-GDP ratio would rem...

According to the Foreign Trade Ministry, for the period between March 16 and May 24, economic losses related to the pandemic amounted to USD 14.1 bn.

The economy shrank by 2.4% in the first quarter of 2020.

Total losses in tax collection in main activities amount to USD 518 mn.

The Central Bank expects the GDP to contract between 7.3% and 9.6% this year. EMFI Securities estimates a fall of 7.9%.

On Monday, Ecuador announced that it has an agreement “in principle” with a bondholder group in possession of 50% of the total outstanding.

The proposed terms would imply an average recovery value of 49.7 cents on the dollar when valued at a 12% exit yield.

The government would exchange 10 old bonds into 4 new bonds that would feature lower step-up coupons, a moderate 8.9% principal haircut, and principal repayment in 5 equal semi-annual installments.

We think the offer positively reflects the Lenín Moreno administration’s market-friendly approach to the restructuring negotiations.

Nonethele...

36 of the 77 eligible countries have applied for the G20’s Debt Service Suspension Initiative (DSSI).

Chinese debt has grown significantly, but has remained highly opaque. The recently released World Bank dataset is a big step forward in this regard.

Countries that would benefit the most from DSSI owe on average 42% of their 2020-2021 and 41.1% of their 2022-2025 debt service to China.

So far, DSSI only extends for payments scheduled for 2020, but there are many voices calling for an extension to 2021.

To put it bluntly, a program of debt relief or a generalized standstill on official debt would go nowhere wit...

In this report you will find:

Background: Legacy in Peril, an assesment of Lenín Moreno's presidential period.

The Word on the Street, a recount of declarations on the restructuring from the administration's allies and enemies.

Moving Forward: Debt Sustainability, our own in-house debt sustainability analysis.

The Offer and the Deal, our expectations for a potential exchange offer and projected recovery values. 

On June 3, President Lenín Moreno announced that Ecuador will report a USD 12 bn deficit because of the plunge in oil prices and lower tax collection.

Ecuador’s oil production reached 333 tbd in May, a MoM recovery of 60.2%, but still representing a decrease of 36.8% compared to the same month in 2019.

April exports reached a historical low for at least 15 years, just USD 74 mn (5,261 kb).

While the country has less and less oxygen, the situation forced the government to issue a new presidential decree on May 19 which practically remove subsidies on automotive sector.

We estimate that subsidies expendit...

Low interest rates and the hunt for yields of the last decade has left broad swaths of EMs overindebted and vulnerable.

The first half of 2020 is not yet over and we already have 3 countries in default.

The recent record of most defaults on Eurobonds on a single year was 4 in 2017, so 2020 is not far from setting new records.

Eurobond restructuring processes are usually among the most complicated due to the variety of holders and the different interests they represent.

Suriname, Zambia, Belize, Sri Lanka and Angola are in the most risk to engross the default-statistic for the year.

May was one of those months that feels like a year. We had a default in Argentina, a tense election in Suriname, a deadly pandemic still spreading around the world, and yet, it was a good month for emerging market debt

Our EMFI Core Index went up for the first time in 6 months. The biggest winners were Argentina, Angola and Ecuador, while Venezuela, Suriname and Sri Lanka were among the negative outliers that went against the general risk-on mood

The macro and fiscal situations deteriorated further for all countries covered, and we chronicled the dramatic economic crash in our Country Reports

We’ve been preparing fo...