Ecuadorean bonds rallied after career banker Guillermo Lasso won the presidential election with a late surge in support, calming investors who thought his opponent was likely to lead the default-prone country into insolvency once again.
Lasso beat out economist Andres Arauz, a left-wing protege of former President Rafael Correa, by a solid margin in Sunday’s runoff vote. Arauz, who conceded defeat, won February’s first round by 13 percentage points.
It was a massive relief for bondholders, who bid up the country’s benchmark notes to their biggest gain since they were restructured just eight months ago. Ecuadorean debt had been trading at levels that signaled broad investor skepticism amid worry that a victory for Arauz would lead to unsustainable levels of social spending and an inevitable default from a politician who promised to prioritize the poor over the powerful.
Lasso, a 65-year-old self-made millionaire and father of five, was largely seen as representing the establishment, having vowed to uphold a $6.5 billion financing agreement with the International Monetary Fund and to keep up payments on the country’s overseas bonds. In his victory speech Sunday evening, Lasso said he will work to create “the prosperity we all long for.”