Moody's lowers Ecuador to stable

Moody's Investors Service said it changed the outlook on Ecuador's sovereign ratings to stable from positive in light of increasing concerns regarding the incoming government's willingness to service debt obligations and uncertainty about its policy direction.

The outlook change affects Ecuador's Caa1 foreign currency government bond rating, its Caa1 country ceiling for foreign currency bonds and its Caa2 country ceiling for foreign currency bank deposits, the agency said, adding that Ecuador's other ratings, including the Ba2 country ceiling for local currency bonds, are unchanged.

"The high level of uncertainty with respect to the intentions of the incoming government to service its obligations prompted Moody's to review the positive outlook and reassess the trajectory of the country's ratings", said Alessandra Alecci, a vice president-senior analyst at Moody's.

"While a market-friendly re-profiling of Ecuador's obligations would be perfectly consistent with a positive outlook, such an outlook is incompatible with the incoming government's repeated assertions that it would consider an outright moratorium despite its ability to pay."

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