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LATAM: Ecuador Elections Approaching, Morgan Stanley Turn Bullish on Bonds

LATAM
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  • Under the Ecuadorian constitution, elected officials must stand down and appoint alternatives during an official election campaign (which started 5 Jan). The earlier news will allow President Noboa to campaign for the presidency in the upcoming 9 Feb election. Noboa and his 2023 run-off opponent, leftist candidate Luisa Gonzalez, are seen as favourites to face off in a second round once again in April.
  • According to Morgan Stanley, recent polls are suggesting that numbers for the incumbent have risen from their lows recently. The bank has moved Ecuador to a “like” stance among emerging-market bonds, citing attractive valuations and an improvement in the energy-shortage situation, which had been weighing on the popularity of Noboa.
  • MS strategists also mention the country’s fiscal and external balances are in a much better place today than a year ago, while the bonds trade cheap versus peers. They see “a lot of upside” in Ecuador notes under a positive election scenario, favouring Ecuador’s 6.9% 2030 bonds.
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  • Under the Ecuadorian constitution, elected officials must stand down and appoint alternatives during an official election campaign (which started 5 Jan). The earlier news will allow President Noboa to campaign for the presidency in the upcoming 9 Feb election. Noboa and his 2023 run-off opponent, leftist candidate Luisa Gonzalez, are seen as favourites to face off in a second round once again in April.
  • According to Morgan Stanley, recent polls are suggesting that numbers for the incumbent have risen from their lows recently. The bank has moved Ecuador to a “like” stance among emerging-market bonds, citing attractive valuations and an improvement in the energy-shortage situation, which had been weighing on the popularity of Noboa.
  • MS strategists also mention the country’s fiscal and external balances are in a much better place today than a year ago, while the bonds trade cheap versus peers. They see “a lot of upside” in Ecuador notes under a positive election scenario, favouring Ecuador’s 6.9% 2030 bonds.