| Headline: Chronicle of a debt foretold Source: Euromoney Date: April 2001
As news of a forthcoming offer started circulating, Ecuadorean bonds began to rise in value. When the offer was released on July 27 2000, they skyrocketed, pricing in a successful exchange. Bondholders, nearly all of whom mark to market, were given the most obvious evidence possible that the new bonds were worth substantially more than the old ones: the benchmark PDI bond rose 53% from July 17 to July 28, and 31% on the day of the offer alone. None of that would have happened had details of the offer been known in advance: the whole thing required that the market be surprised by the generosity of the terms. “To the credit of the Ecuadoreans, it did not leak,” says Nazareth Festekjian, a managing director at Salomon Smith Barney responsible for structuring the deal. “That helped us. If the details of the deal were leaked to the market, and they’re expecting X and you deliver anything less than that, then they are unhappy. | |||||||||||||||||||||||||||||||||||||||||