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Ecuador to resume debt talks in end April

NEW ORLEANS: Ecuador plans to resume talks with private and official creditors in late April after seeing how the country's switch to the dollar affects its ability to pay its debts, Finance Minister Jorge Guzman said on Sunday.

"We plan to resume talks with private bond holders and with the Paris Club (of official creditors) in the last week in April," Guzman told Reuters after a closed-door meeting with investors. "We want this process to be simultaneous."

Bond holder representatives came away from the presentation disappointed that Guzman did not lay out a strategy to solve Ecuador's default on $6.5 billion in bonds.

"They are not ready to talks about debt restructuring at this point. We have no choice but to wait until they are", said Peter Allen, a representative of smaller bond holders.

Guzman said he planned to hold two or three meetings with major creditors on the margins of this week's annual meetings of the Inter-American Development Bank "simply to assure them that we have not forgotten them."

Ecuadorean debt negotiator Juan Montufar said he had "very few informal contacts" with creditors over the weekend, but talks focused on Ecuador's move to ditch its sucre currency and adopt the U.S. dollar in a bid to overcome financial collapse.

"The message has been that we are going to restart the talks as soon as we know the impact of dollarization", Montufar told Reuters.

CREDITORS ANXIOUS

Ecuador wrote itself into economic history books last year when it became the first country to default on Eurobonds and Brady bonds, an instrument set up under former U.S. Treasury Secretary to restructure commercial debt from the 1982 Latin American debt crisis.

The recession-hit Andean country earlier this month won the promise of $2 billion in financial help from the International Monetary Fund and other multilateral lenders.

Talks with creditors broke down early this year as Ecuador sank into political chaos when Andean Indians protested the dollarization plan and army colonels ousted the president.

Creditors are anxious to know how the new leader, president Gustavo Noboa, will deal with the country's debt.

Bond holders are also concerned that any restructuring burden be shared by other creditors and some want the U.S. Treasury to get involved.

"Nobody is going to wait and see if dollarization works and then restructure the debt. The Ecuadoreans have to start making projections and decide how they are going to spread a haircut if there needs to be one," Allen said.

Private creditors took a 45 percent loss on Ecuadorean debt when it was restructured in Brady bonds backed by U.S. Treasury bond collateral in 1994. They would like to see the Paris Club governments accept a 45 percent discount before discussing further restructuring.

Bond holder representatives said the U.S. Treasury was using Ecuador as a test case for burden sharing, but had yet to make a contribution.

"The common perception is that the U.S. Treasury was very heavily involved in the decisions to restructure some of the debt," said Jerome Booth, of Ashmore Investment Management.

"There cannot be any formal negotiations until we have some of the issues of burden sharing cleared up," Booth said. -Reuters