The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.

All material subject to strictly enforced copyright laws. © 2022 Euromoney, a part of the Euromoney Institutional Investor PLC.

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.

"Ecuador came out with a take-it-or-leave-it proposal," says one investor with a close interest. "And investors took it, because no-one had enough of the bonds to make the fight worthwhile."

Ecuador's restructuring follows similar exchange offers by Ukraine and Pakistan, the other two sovereigns which in the past year have taken the previously unprecedented step of defaulting on international bonds.

But then, last month, came a reminder that debt restructuring can get very messy for governments. Elliott Associates, a small US investment fund, had ob-tained an order from a US court in June which allows it to seize any payments from the Peruvian treasury. On September 7, Peru responded by suspending an $80 million coupon payment on one of its Brady bonds.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.


Unlimited access to and

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually


Unlimited access to and, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors


Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree