Ecuador to Default on Brady Bond Payment

Ecuador said it will defer a $96-million Brady Bond coupon payment due on Monday, which would make it the first country ever to default on the debt backed by U.S. Treasury bonds. The government also said it would propose to bondholders next month an exchange of new, non-collateralized debt for Brady Bonds in a bid to ease its $16.3-billion debt, considered the heaviest debt burden in Latin America. “The government anticipates that the debt relief from this restructuring, together with an economic program that seeks medium- and long-term viability and assures the support of the international financial community, will permit the country to achieve the stabilization of its economy,” the government said in a statement. Ecuador, struggling with its worst economic crisis in 70 years, has said its debt is virtually unserviceable. The government hammered out the debt restructuring plan with the International Monetary Fund since last week after the country’s bonds plunged on fears it would default on its August Brady payments.