Ecuador markets first sovereign social bond from LatAm

Ecuador is marketing a dual-tranche offering among international investors, the first crossborder social bond to come from a Latin American sovereign, say sources.

By Miluska Berrospi

NEW YORK, Jan 16 (IFR) - Ecuador is marketing a dual-tranche offering among international investors, the first crossborder social bond to come from a Latin American sovereign, say sources.

Sole lead Goldman Sachs is showing accounts US$326.8m of Class B zero coupon notes due 2035 and a US$230.9m of Class A notes that carry a 2.6% coupon and benefit from a guarantee from regional development bank, the IDB, according to a prospectus seen by IFR.

The Class B notes are expected to come at a discount of around mid 60s and be priced with a yield of 12.25%, while the Class A notes are expected to be taken by Goldman Sachs, said one investor.

With an average life of around 4.5 years, the Class B tranche is coming about 275bp over the sovereign's curve, where the Ecuador's 2024s have been trading at around 9.537%, said the investor.

"It is an asset that is expected to be less liquid but you are replicating Ecuador at a significant pickup," he said.

Proceeds will ultimately be used to finance the construction of social housing.

(Reporting By Miluska Berrospi and Paul Kilby; Editing by David Bell)

((paulj.kilby@thomsonreuters.com; 646 223 4733; Reuters Messaging: paulj.kilby.thomsonreuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Reuters

Reuters, the news and media division of Thomson Reuters, is the world’s largest international multimedia news provider reaching more than one billion people every day. Reuters provides trusted business, financial, national, and international news to professionals via Thomson Reuters desktops, the world's media organizations, and directly to consumers at Reuters.com and via Reuters TV.

Learn More