By Andrea Jaramillo and Nathan Gill
Ecuador’s dollar bonds surged, sending yields to a record low, after the government said it’s in talks with China to renew a $1.5 billion credit line to help finance next year’s budget.
The South American nation’s dollar bonds due 2024 jumped 2.92 cents to 107.76 cents per dollar at 10:45 a.m. in New York. The yield dropped 40 basis points, or 0.4 percentage point, to 6.85 percent.
Ecuador, faced with the highest borrowing costs in South America after Venezuela and Argentina, has relied on Chinese lending to help cover swelling budget deficits since defaulting on $3.2 billion of its foreign debt almost six years ago. Finance Minister Fausto Herrera met with officials from China Development Bank Corp. on Aug. 22 in Quito to review investment projects financed by the bank and discuss the renewal of the credit line, the Finance Ministry said yesterday.
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