S&P: Ecuador election round a surprise for markets

Standard & Poor's said that the outcome of the second round of presidential elections in the Republic of Ecuador (CCC+/stable/C sovereign credit ratings) on Nov. 26 surprised markets yet again.

With 95% of ballot boxes nationwide tallied, President-elect Raphael Correa secured victory with a much larger margin than the electoral polls suggested, garnering a resounding 57.2% of votes and turning the tables on banana tycoon Álvaro Noboa of Partido Renovador Institucional Acción Nacional, who won the first round, but received only 42.8% in the second round, the agency said.

S&P noted that Noboa has not conceded and says he could challenge the election results.

According to S&P credit analyst Lisa Schineller, electoral preferences shifted rapidly in the closing week of the campaign, a repeat performance of what occurred during the first round in October.

"Ecuador's sharp regional divisions, a mutual disdain between the Coast and the Sierra and its marginalized indigenous population have historically undermined consistent and effective policy making and political and/or party alliances in Congress tend to be short lived and opportunistic in nature," said Schineller.

"President-elect Correa will face an even more challenging congressional dynamic than usual since he did not ally himself with any deputies during the election. He backed no individual candidates and has no formal party base from which to begin political discussions with the legislature," she added.

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