EM Alpha: Ecuador: Move to MW and close ECUA ‘35s trade after exceeding target.

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EM Alpha: Ecuador: Move to MW and close ECUA ‘35s trade after exceeding target.

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EM Alpha

Ecuador: Move to MW and close ECUA ‘35s

trade after exceeding target.

Closing trade after exceeding our target 26 June 2026

We close our Buy ECUA’35s trade recommendation after exceeding our original target. GEM FI & FX Strategy

We entered the trade at $74.4 on 9 October and now exit at $91.4. For details on the Emerging Markets Global

trade, see Long ECUA ‘35s. This time could be finally different for fuel subsidies. Lucas Martin, CFA

Move EXD recommendation to Marketweight SovereignBofAS Debt FI Strategist

We downgrade our recommendation on Ecuador’s external debt (EXD) to Marketweight +1lucas.martin@bofa.com646 855 1731

from Overweight. Given the hawkish shift at the Fed, we are becoming more selective Alexander Muller

on EM high yielders. We remain constructive on Ecuador’s medium-term outlook, but we Andean(ex-Ven) Carib Economist

think it will be harder for Ecuador to outperform in short-term due to lack of meaningful BofASalexander.muller@bofa.com

positive catalysts and investor concerns about 1) El Niño effects (drought and electricity Jane Brauer

blackouts) and 2) fiscal slippage ahead of the November local elections. Those concerns Sovereign Debt FI Strategist

are unlikely to dissipate soon. Lower oil prices also limit the room for outperformance. BofASjane.brauer@bofa.com

Risks to the Views DavidGlobal EMHauner,FI/FX CFAStrategist>>

Risks to the upside are fiscal consolidation, completion of IMF reviews and multilateral MLIdavid.hauner@bofa.com(UK)

financing, Sacha oil field concession, and improving current account dynamics. Risks to GEMs FI Strategy & Economics