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Ecuador Reports 98.5% of Bondholders Exchanged Bonds

Stephan Kueffner

(Bloomberg) -- Ecuador said 98.5% of bondholders agreed to exchange the nation’s overseas debt for new notes, completing the restructuring of $17.4 billion in bonds.

“The enormous and notable work by Ecuador’s technical team will allow us to keep international financing open and focus on restarting the economy,” Finance Minister Richard Martinez said in a statement.

The bond exchange was conditioned on completion of a $6.5 billion funding agreement with the International Monetary Fund, which was announced on Aug. 28. Bondholders not participating in the exchange will receive $270 million in bonds due 2040.

Bondholders agreed to a $1.5 billion haircut on capital as Ecuador worked to avert a hard default. In exchange for its 10 outstanding bonds, Ecuador issued three new ones due 2030, 2035, and 2040, lengthening maturities to an average 12.7 years from 6.1 years and slashing interest rates to an average 5.3% from 9.2%. The new notes will start to trade tomorrow.

Bondholders who voted in favor of Ecuador’s offer in a consent solicitation also received a $1 billion zero-coupon bond for past-due interest since March.

(Updates with fnance minister quote, framework of the new bond structure)

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