EMFI Sees ‘Large Upside’ for Ecuador Bonds on Fiscal Proposals

President Daniel Noboa’s proposed fiscal changes may produce large upsides for Ecuador’s global bonds, EMFI Group Limited economist Valeria Garcés, strategist Guillermo Guerrero and analyst Oscar Rosales wrote in a report to clients.

• Keeps buy recommendation on notes as a “value play” for investors even after prices rallied since beginning of month
• NOTE: Bonds maturing in 2035 are trading at 40.3 cents on the dollar, the highest in nearly a year, according to indicative pricing compiled by Bloomberg
• Downside risks include lack of progress on fiscal measures, sooner-than-anticipated default
• “The market continues pricing in a restructuring of Eurobond debt ...