Obligation Equateur 10.5% ( XS1199929826 ) en USD

Société émettrice Equateur
Prix sur le marché 100 %  ⇌ 
Pays  Equateur
Code ISIN  XS1199929826 ( en USD )
Coupon 10.5% par an ( paiement semestriel )
Echéance 24/03/2020 - Obligation échue



Prospectus brochure de l'obligation Ecuador XS1199929826 en USD 10.5%, échue


Montant Minimal 200 000 USD
Montant de l'émission 2 201 616 000 USD
Description détaillée L'Équateur, pays d'Amérique du Sud situé sur la ligne équatoriale, est caractérisé par une grande diversité géographique incluant la cordillère des Andes, la forêt amazonienne et les îles Galapagos.

L'Obligation émise par Equateur ( Equateur ) , en USD, avec le code ISIN XS1199929826, paye un coupon de 10.5% par an.
Le paiement des coupons est semestriel et la maturité de l'Obligation est le 24/03/2020







OFFERING CIRCULAR SUPPLEMENT

The Republic of Ecuador
U.S.$701,616,000 10.500% Notes due 2020
U.S.$500,000,000 10.750% Notes due 2022

The Republic of Ecuador (the "Republic" or "Ecuador") and The Bank of New York Mellon, as trustee (the "Trustee")
have entered into (i) the indenture dated March 24, 2015, with respect to the 2020 Notes (as defined below) (the "2020
Indenture"), and (ii) the indenture dated July 28, 2016, with respect to the 2022 Notes (as defined below) (the "2022
Indenture", and together with the 2020 Indenture, the "Indentures"). Pursuant to the respective Indentures, the
Republic has issued (i) an initial U.S.$750,000,000 and an additional U.S.$750,000,000 of its 10.500% Notes due
2020 (together, the "2020 Notes"), and (ii) an initial U.S.$1,000,000,000 and an additional U.S.$1,378,000,000 of its
10.750% Notes due 2022 (together, the "2022 Notes", and together with the 2020 Notes, the "Original Notes").

The Republic is issuing (i) an additional U.S.$701,616,000 aggregate principal amount of its 10.500% 2020 Notes (the
"Additional 2020 Notes"), and (ii) an additional U.S.$500,000,000 aggregate principal amount of its 10.750% 2022
Notes (the "Additional 2022 Notes", and together with the Additional 2020 Notes, the "Additional Notes"). The
Additional Notes will be additional notes issued under each respective Indenture. Each series of Additional Notes will
have identical terms and conditions as its respective series of Original Notes, other than issue date and issue price, and
each will be consolidated and form a single series with their respective series of Original Notes (the Additional Notes
and the Original Notes, together the "Notes"). Each series of Additional Notes will vote together as a single class with
its respective series of Original Notes. Upon consummation of this offering, the aggregate principal amount of (i) 2020
Notes will be U.S.$2,201,616,000, and (ii) 2022 Notes will be U.S.$2,878,000,000.

This Offering Circular Supplement (the "Supplement") is supplemental to and should be read in conjunction with (i)
the Offering Circular dated March 24, 2015, and its supplement dated May 14, 2015, with respect to the 2020 Notes
(the "2020 Offering Circular"), and (ii) the Offering Circular dated July 28, 2016, and its supplement dated September
30, 2016, with respect to the 2022 Notes (the "2022 Offering Circular"), and (iii) the Additional Offering Circular
Supplement dated October 11, 2017, with respect to the 2022 Notes (the "Additional Supplement", and together with
the 2020 Offering Circular and the 2022 Offering Circular, the "Offering Circulars"), attached as Appendix A,
Appendix B and Appendix C, respectively, to this Supplement. Terms defined in the Offering Circulars shall have the
same meaning in this Supplement. With effect from the date of this Supplement, the information appearing in the
Offering Circulars shall be amended and/or supplemented in the manner described in this Supplement.

There is currently no public market for the Additional Notes. Application has been made to list the Additional Notes
on the Official List of the Luxembourg Stock Exchange and to have the Additional Notes admitted to trading on the
Euro MTF Market. This Supplement, together with the Offering Circulars, constitutes a prospectus for the purpose of
the Luxembourg Law dated July 10, 2005 on prospectuses for securities, as amended. The Additional Notes are and
will be issued in registered form and, in limited circumstances, definitive form in minimum denominations of
U.S.$200,000 and integral multiples of U.S.$1,000 in excess thereof.

See "Risk Factors" section of this Supplement regarding certain risk factors you should consider before
investing in the Additional Notes.
___________________

Additional 2020 Notes Price: 103.509% plus accrued interest from March 24, 2018 to but excluding August 31,
2018
Additional 2022 Notes Price: 104.753% plus accrued interest from March 28, 2018 to but excluding August 31,
2018

Delivery of the Additional Notes was made on August 31, 2018.


I









The Additional Notes have not been and will not be registered under the Securities Act of 1933, as amended
(the "Securities Act"). The Additional Notes may not be sold within the United States or to U.S. persons except
in reliance on the exemption from registration provided under the Securities Act and offered and sold to certain
persons in offshore transactions in reliance on Regulation S under the Securities Act. There are no Additional
Notes being offered and sold in the United States or to U.S. persons.

The Additional Notes will be represented by one or more permanent global notes in fully registered form without
interest coupons, deposited with a common depositary for Euroclear Bank S.A./N.V. ("Euroclear") and Clearstream
Banking, société anonyme ("Clearstream"). Beneficial interests of Euroclear participants in the global notes will be
shown on, and transfers thereof between Euroclear participants will be effected only through, records maintained by
Euroclear and its direct and indirect participants, including Clearstream.

ANY OFFER OR SALE OF NOTES IN ANY MEMBER STATE OF THE EUROPEAN ECONOMIC AREA (THE
"EEA") THAT HAS IMPLEMENTED DIRECTIVE 2003/71 EC (THE "PROSPECTUS DIRECTIVE") MUST BE
ADDRESSED TO QUALIFIED INVESTORS (AS DEFINED IN THE PROSPECTUS DIRECTIVE).

The date of this Supplement is September 3, 2018.


II




IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE REPUBLIC AND THE TERMS OF THE OFFERING, INCLUDING THE
MERITS AND THE RISKS INVOLVED.
You should rely only on the information contained in the Offering Circulars and this Supplement or
to which the Republic of Ecuador has referred you. Ecuador has not authorized anyone to provide
information that is different from the information contained in the Offering Circulars and this Supplement.
This Supplement and the Offering Circulars may only be used where it is legal to sell these Additional Notes.
The information in this Supplement may only be accurate on the date of this Supplement.
This Supplement may only be used for the purposes for which it has been published.
_________________
TABLE OF CONTENTS
Page

THE ADDITIONAL NOTES OFFERING .............................................................................................................. 1
RISK FACTORS .................................................................................................................................................... 4
Risk Factors Relating to the Additional Notes ........................................................................................... 4
Risk Factors Relating to Ecuador .............................................................................................................. 7
USE OF PROCEEDS ........................................................................................................................................... 19
THE REPUBLIC OF ECUADOR ......................................................................................................................... 20
Territory, Population and Society ............................................................................................................ 20
Pedernales Earthquake ............................................................................................................................ 21
Historical Background ............................................................................................................................ 23
Form of Government .............................................................................................................................. 23
Memberships in International Organizations and International Relations .................................................. 33
THE ECUADORIAN ECONOMY ....................................................................................................................... 38
Gross Domestic Product .......................................................................................................................... 38
Economic and Social Policies.................................................................................................................. 40
Telecommunications ............................................................................................................................... 66
Other Sectors of the Economy ................................................................................................................. 66
LEGAL PROCEEDINGS ..................................................................................................................................... 76
Notifications under Bilateral Investment Treaties .................................................................................... 83
BALANCE OF PAYMENTS AND FOREIGN TRADE ....................................................................................... 85
Balance of Payments ............................................................................................................................... 85
Current Account ..................................................................................................................................... 89
International Reserves ............................................................................................................................. 91
Foreign Trade ......................................................................................................................................... 91
Trade Policy ........................................................................................................................................... 92
Regional Integration ............................................................................................................................... 93
Composition of Trade ............................................................................................................................. 94
Foreign Direct Investment ....................................................................................................................... 98
MONETARY SYSTEM ..................................................................................................................................... 100
The Central Bank .................................................................................................................................. 100
Financial Sector .................................................................................................................................... 101
Banking System .................................................................................................................................... 106
Banking Sector ..................................................................................................................................... 110
Cooperative Banks ................................................................................................................................ 111
Capital Markets .................................................................................................................................... 111
Interest Rates and Money Supply .......................................................................................................... 112
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Inflation ................................................................................................................................................ 116
PUBLIC SECTOR FINANCES .......................................................................................................................... 118
Overview .............................................................................................................................................. 118
Non-Financial Public Sector Revenues and Expenditures ...................................................................... 122
Central Government Revenues and Expenditures ................................................................................... 124
Taxation and Customs........................................................................................................................... 126
Central Government Expenditures ......................................................................................................... 128
2017 and 2018 Budgets ......................................................................................................................... 129
PUBLIC DEBT .................................................................................................................................................. 130
General ................................................................................................................................................. 130
External Debt ....................................................................................................................................... 131
Internal Debt......................................................................................................................................... 136
Decree 1218 ......................................................................................................................................... 138
Organic Law for Development, Investment, Employment and Fiscal Stability ........................................ 141
Debt Obligations ................................................................................................................................... 142
GSI Loan Facility ................................................................................................................................. 145
GSI Repo Transaction ........................................................................................................................... 147
Other obligations .................................................................................................................................. 149
PLAN OF DISTRIBUTION ............................................................................................................................... 153
Notice to Ecuadorian Residents ............................................................................................................. 153
VALIDITY OF THE ADDITIONAL NOTES .................................................................................................... 154
GENERAL INFORMATION ............................................................................................................................. 155
APPENDIX A: Offering Circular dated March 24, 2015, and its supplement dated May 14, 2015, with
respect to the 2020 Notes ...................................................................................................................... 163
APPENDIX B: Offering Circular dated July 28, 2016, and its supplement dated September 30, 2016, with
respect to the 2022 Notes ...................................................................................................................... 164
APPENDIX C: Additional Offering Circular Supplement dated October 11, 2017, with respect to the 2022
Notes .................................................................................................................................................... 165

_________________

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The Additional Notes will be general, direct, unsecured, unsubordinated and unconditional obligations of
Ecuador, will be backed by the full faith and credit of Ecuador and will rank equally in terms of priority with
Ecuador's External Indebtedness (other than Excluded Indebtedness), as defined in "Description of the Notes" in
each Offering Circular, provided that such ranking is in terms of priority only and does not require that Ecuador
make ratable payments on the Additional Notes with payments made on its other External Indebtedness.
The Additional Notes will be issued in registered form only. Additional Notes sold in offshore transactions
in reliance on Regulation S under the Securities Act ("Regulation S") will be represented by one or more permanent
global notes in fully registered form without interest coupons (the "Regulation S Global Note") and Additional
Notes sold in the United States, if any, to qualified institutional buyers (each a "qualified institutional buyer") as
defined in, and in reliance on, Rule 144A under the Securities Act ("Rule 144A") will be represented by one or more
permanent global notes in fully registered form without interest coupons (the "Restricted Global Note" and, together
with the Regulation S Global Note, the "Global Notes"), in each case deposited with a common depositary for, and
registered in the nominee name of a common depositary for Euroclear for the respective accounts at Euroclear as
such subscribers may direct. Beneficial interests of Euroclear participants (as defined under "Book-Entry Settlement
and Clearance" in each Offering Circular) in the Global Notes will be shown on, and transfers thereof between
Euroclear participants will be effected only through, records maintained by Euroclear and its direct and indirect
participants, including Clearstream. Except as described herein, definitive Additional Notes will not be issued in
exchange for beneficial interests in the Global Notes in each relevant Offering Circular.
The Republic has taken reasonable care to ensure that the information contained in this Supplement is true
and correct in all material respects and not misleading as of the date hereof, and that, to the best of the knowledge
and belief of the Republic, there has been no omission of information which, in the context of the issue of the
Additional Notes, would make this Supplement as a whole or any information included in this Supplement,
misleading in any material respect. The Republic accepts responsibility accordingly.
This Supplement does not constitute an offer by, or an invitation by or on behalf of, the Republic to
subscribe to or purchase any of the Additional Notes. Each recipient shall be deemed to have made its own
investigation and appraisal of the financial condition of the Republic. The distribution of this Supplement or any part
of it and the offering, possession, sale and delivery of the Additional Notes in certain jurisdictions may be restricted
by law. Persons into whose possession this Supplement comes are required by the Republic to inform themselves
about and to observe any such restrictions. See "Transfer Restrictions" in each Offering Circular for a description of
further restrictions on the offer, sale and delivery of Additional Notes, the distribution of this Supplement, and other
offering material relating to the Additional Notes.
Each purchaser of the Additional Notes sold outside the United States in reliance on Regulation S will be
deemed to have represented that it is not purchasing the Additional Notes with a view to distribution thereof in the
United States. With respect to the offer and sale of the Additional Notes by the Republic, no Additional Notes will
be offered and sold in the United States or to U.S. persons.






THE ADDITIONAL NOTES OFFERING
The following summary does not purport to be complete and is qualified in its entirety by, and is subject to,
the detailed information appearing elsewhere in this Supplement and in the attached Offering Circulars, in
particular in the sections entitled the "Offering" and "Description of the Notes" in each attached Offering Circular.
Each series of Additional Notes will have identical terms and conditions as its respective series of Original Notes,
other than the issue date and issue price as described below.
Issuer:
The Republic of Ecuador.
Additional Notes Issue Amount:
Additional 2020 Notes: U.S.$701,616,000. Upon consummation of this
Additional Notes offering, the aggregate principal amount of the 2020
Notes will be U.S.$2,201,616,000.
Additional 2022 Notes: U.S.$500,000,000. Upon consummation of this
Additional Notes offering, the aggregate principal amount of the 2022
Notes will be U.S.$2,878,000,000.
Securities Offered:
U.S.$701,616,000 principal amount of 10.500% notes due 2020.
Consolidated with and forming a single series, from and including the
Issue Date, with the 2020 Notes issued originally on March 24, 2015 and
reopened on May 19, 2015, in the aggregate principal amount of
U.S.$1,500,000,000.
U.S.$500,000,000 principal amount of 10.750% notes due 2022.
Consolidated with and forming a single series, from and including the
Issue Date, with the 2022 Notes issued originally on July 28, 2016 and
reopened on September 30, 2016 and October 16, 2017, in the aggregate
principal amount of U.S.$2,378,000,000.
Issue Format:
Rule 144A/Regulation S; however, with respect to the offer and sale of the
Additional Notes by the Republic, no Additional Notes will be offered and
sold in the United States or to U.S. persons
Issue Price:
For the 2020 Notes, 103.509% plus accrued interest from March 24, 2018
to but excluding August 31, 2018, which equals U.S.$45.50 per
U.S.$1,000 principal amount of 2020 Notes for a total of U.S.$1,080.59.
For the 2022 Notes, 104.753% plus accrued interest from March 28, 2018
to but excluding August 31, 2018, which equals U.S.$45.38889 per
U.S.$1,000 principal amount of 2022 Notes for a total of
U.S.$1,092.91889.
Issue Date:
August 31, 2018.
Maturity Date:
2020 Notes: March 24, 2020.
2022 Notes: March 28, 2022.
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Interest:
2020 Notes: 10.500% per annum, computed on the basis of a 360-day year
of twelve 30-day months.
2022 Notes: 10.750% per annum, computed on the basis of a 360-day year
of twelve 30-day months.
Interest Payment Dates:
2020 Notes: Each March 24 and September 24, commencing on
September 24, 2018.
2022 Notes: Each March 28 and September 28, commencing on
September 28, 2018.
Form:
The Additional Notes will be represented in the form of global notes,
without coupons, registered in the nominee name of the common
depositary for Euroclear and Clearstream for the accounts of its
participants. Additional Notes in definitive certificated form will not be
issued in exchange for the global notes except under limited
circumstances.
Denominations:
The Republic will issue the Additional Notes only in denominations of
U.S.$200,000 and integral multiples of U.S.$1,000 in excess thereof.
Ranking:
The Additional Notes will be general, direct, unsecured, unsubordinated
and unconditional obligations of Ecuador, will be backed by the full faith
and credit of Ecuador and will rank equally in terms of priority with
Ecuador's External Indebtedness (other than Excluded Indebtedness),
provided, that, such ranking is in terms of priority only and does not
require that Ecuador make ratable payments on the Additional Notes with
payments made on its other External Indebtedness.
Use of Proceeds:
The Republic will use the proceeds of U.S.$500,000,000 of the Additional
Notes in accordance with the limitations of the Public Planning and
Finance Code, as further described in "Use of Proceeds" on page 19 of this
Supplement and "The Republic of Ecuador­Public Debt­GSI Repo
Transaction" on page 147 of this Supplement.
Trustee, Registrar and Transfer
The Bank of New York Mellon.
Agent:
London Paying Agent:
The Bank of New York Mellon, London Branch.
Luxembourg Listing Agent,
Transfer Agent and Luxembourg
Paying Agent:
The Bank of New York Mellon SA/NV, Luxembourg Branch
Governing Law:
The Additional Notes will be governed by the laws of the State of New
2




York, except for the terms concerning submissions to arbitration which
will be governed by English law.
Further Issues:
The Republic may, from time to time, without the consent of the holders
of the Additional Notes, create and issue additional notes having the same
terms and conditions as the Additional Notes in all respects (or in all
respects except for the amount of the first interest payment and the issue
price) provided that:
(a)
the notes are consolidated and form a single series with
the outstanding Notes, and
(b)
such additional notes do not have, for purposes of U.S.
federal income taxation, a greater amount of original
issue discount than the outstanding Additional Notes
have as of the date of the issue of such additional notes
(regardless of whether any holders of such Notes are
subject to U.S. federal income taxation).

3




RISK FACTORS
This section describes certain risks associated with investing in the Additional Notes. Investors should
consult their financial and legal advisors about the risk of investing in the Additional Notes. Ecuador disclaims any
responsibility for advising investors on these matters.
Risk Factors Relating to the Additional Notes
There may be no active trading market for the Additional Notes, or the trading market for the Additional
Notes may be volatile and may be adversely affected by many factors.
The Additional Notes will not have any established trading market when issued, and there can be no
assurance that an active trading market for the Additional Notes will develop, or, if one does develop, that it will be
maintained. If an active trading market for the Additional Notes does not develop or is not maintained, investors
may not be able to sell their Additional Notes easily or at prices that will provide them with a yield comparable to
similar investments that have a developed secondary market, and the market or trading price and liquidity of the
Additional Notes may be adversely affected. Even if a trading market for the Additional Notes develops, the
Additional Notes may trade at a discount to their initial offering price, depending upon prevailing interest rates, the
market for similar securities, general economic conditions, and the financial condition of Ecuador. Although
application has been made to list the Additional Notes on the Official List of the Luxembourg Stock Exchange, and
to have the Additional Notes admitted to trading on the Euro MTF Market, there can be no assurance that such
application will be accepted or that an active trading market will develop. Illiquidity may have a material adverse
effect on the market value of the Additional Notes.
The price at which the Additional Notes will trade in the secondary market is uncertain.
Application has been made to list the Additional Notes on the Official List of the Luxembourg Stock
Exchange and to have the Additional Notes admitted to trading on the Euro MTF Market. No assurance can be given
as to the liquidity of the trading market for the Additional Notes. The price at which the Additional Notes will trade
in the secondary market is uncertain.
The Additional Notes contain provisions that allow the payment terms to be amended without the consent of
all holders.
The Additional Notes contain provisions, commonly known as "collective action clauses," regarding
acceleration of the applicable series of Notes and voting on future amendments, modifications and waivers to the
terms and conditions of such Notes. Under these provisions, which are described in the sections entitled
"Description of the Notes--Events of Default" and "Description of the Notes--Modifications--Collective Action"
in the Offering Circulars, Ecuador may: (a) amend the payment provisions of the Notes and certain other reserved
matters with the consent of the holders of 75% of the aggregate amount of the outstanding Notes and other non-
reserved matters with the consent of the holders of 66 % of the aggregate amount of the outstanding Notes; (b) make
reserved matter modifications affecting two or more series of debt securities with the consent of (x) holders of at
least 66% of the aggregate principal amount of the outstanding debt securities of all series that would be affected
by that reserved matter modification (taken in aggregate) and (y) holders of more than 50% of the aggregate
principal amount of the outstanding debt securities of each affected series (taken individually); or (c) make reserved
matter modifications affecting two or more series of debt securities with the consent of holders of at least 75% of the
aggregate principal amount of the outstanding debt securities of all affected series (taken in aggregate), provided that
the Uniformly Applicable condition is satisfied.
Recent federal court decisions in the United States create uncertainty regarding the meaning of ranking
provisions and could potentially reduce or hinder the ability of sovereign issuers to restructure their public sector
debt.
4




In litigation in federal courts in New York captioned NML Capital, Ltd. v. Republic of Argentina, the U.S.
Court of Appeals for the Second Circuit ruled on August 23, 2013 that the ranking clause (which included ratable
payment language) in certain defaulted notes issued by Argentina, prevents Argentina from making payments in
respect of new performing notes that it issued in exchange for the defaulted notes in a restructuring in which a
certain minority of holders elected not to participate, unless it makes pro rata payments in respect of the defaulted
notes that rank pari passu with new notes. The defaulted notes in this case did not contain the "collective action
clauses" referred to in the preceding risk factor. While the U.S. Court of Appeals for the Second Circuit's decision
was narrowly tailored to the facts of the case, including the conduct of Argentina and the specific wording of the
pari passu clause in the defaulted notes, the implication from this case is that it may be more difficult for sovereign
debtors to restructure their debts.
On February 18, 2014, the Republic of Argentina filed a petition in the U.S. Supreme Court seeking review
of the Second Circuit's August 2013 ruling. On June 16, 2014, the U.S. Supreme Court denied the Republic of
Argentina's petition for review, thereby letting stand the Second Circuit's August 2013 ruling. On July 22, 2014,
the U.S. District Court for the Southern District of New York enforced the ruling and barred the international trustee
from making a U.S.$539 million payment to bondholders of the new performing notes that Argentina issued in
exchange for the defaulted notes. On the same date, the U.S. District Court ordered Argentina to undergo
continuous mediation and settlement talks with holders of the defaulted notes.
On June 16, 2014, the U.S. Supreme Court issued an opinion in a related case, ruling that the Republic of
Argentina is not immune from complying with a judgment creditor's discovery demands seeking information about
its assets outside the United States. On August 11, 2014, the U.S. District Court for Nevada granted NML Capital,
Ltd's motion to compel discovery of information regarding Argentine assets in the United States.
On February 25, 2015, the U.S. District Court for the Southern District of New York ordered Deutsche
Bank and JPMorgan Chase and Co. to deliver the documents relevant to Argentina's planned new issuance of dollar-
denominated debt to the court and NML Capital, Ltd.
On December 10, 2015, Mauricio Macri became the new president of Argentina. Under his administration,
Argentina negotiated and reached settlements with a group of holdout creditors for U.S.$1.35 billion on February 2,
2016, and a group of six other holdout creditors for U.S.$1.1 billion on February 18, 2016. On February 19, 2016,
the U.S. District Court lifted its ban on payments to creditors on the condition that Argentina repeal two laws
enacted for the purpose of blocking agreements with holdout creditors and agree to pay remaining holdouts by a
certain date. Argentina's congress repealed the two laws on March 31, 2016. The U.S. Court of Appeals for the
Second Circuit voted to confirm the lifting of the ban on April 13, 2016. Argentina proceeded with a sale of
U.S.$16.5 billion in sovereign bonds on April 19, 2016.
On December 22, 2016, the U.S. District Court for the Southern District of New York issued an opinion
dismissing claims by certain institutional investors that had not participated in the February 2016 settlements,
rejecting their claims based upon the breach of the pari passu clause and any claims that accrued outside of the six-
year statute of limitations. In this new decision, the U.S. District Court held that Argentina's payments to creditors
who participated in the settlement were not a violation of the rights of the non-settling investors. The U.S. District
Court also found that even if the pari passu clause had been breached, monetary damages would be barred as
duplicative of the damages from failure to pay, and an injunction would be granted only in extraordinary
circumstances. The December 22, 2016 decision by the U.S. District Court appears to limit the application of the
prior rulings in the litigation relating to the defaulted notes, although it is difficult to predict what impact, if any, the
December 22, 2016 decision will have on sovereign issuers such as Ecuador.
Despite the above recent developments and settlement agreements between the Republic of Argentina and
its creditors, Ecuador cannot predict what impact, if any, the above U.S. court rulings will have on sovereign issuers
such as Ecuador.
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