Ecuador’s dollar bonds slumped to a record low Monday after Congress rejected a bill designed to narrow the budget deficit and pave the way for the disbursement of more loans from the International Monetary Fund.
The country’s dollar bonds maturing in 2028 declined for a ninth day — sinking more than 9 cents on the dollar to 77 cents in New York trading. The extra yield investors demand to hold Ecuador debt over U.S. Treasuries widened 253 basis points to 11.06 percentage points, according to J.P. Morgan indexes.
Across South American bonds have been pummelled this month as social unrest swept Bolivia and Chile, violent crime flared in Mexico and elections heralded the return of populism to Argentina. But it is Ecuador that is now leading the pack down as political pressures threaten to send the fiscal deficit rising out of control, with at least six of the country’s dollar sovereign bonds falling 10 cents or more on Monday.
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