Small investors flex their muscles

Emerging market governments can default on their international bonds with impunity. That seemed to be the clear message on August 23 when Ecuador secured the support of 99% of investors for its oVer to swap defaulted Brady and Eurobonds for paper worth 41% less than the old debt.

Investors who held out against the deal have discussed setting up a group to sue Ecuador, but there may be too few of them to make it worth bringing a suit.