Investor Favorite Now Seen Heading to Runoff in Ecuador Vote

Ecuador’s bonds rose for a second day as conservative presidential candidate Guillermo Lasso overtook a rival as the final votes were counted from Sunday’s election, boosting his chances of securing a place in the April runoff.

Lasso, a career banker who wants close ties with Washington, held a razor-thin margin over indigenous party candidate Yaku Perez, an environmentalist who opposes big mining projects. Perez officially requested a recount of votes in seven provinces, the National Electoral Council President Diana Atamaint said via Twitter.

At 2:45 p.m. local time, with 98.9% of the votes count, Lasso had 19.7%, followed by Perez’s 19.46%. Socialist economist Andres Arauz retained the lead with 32.64%. If the result holds through the completion of the count and recount, Lasso will face Arauz on April 11.

Investor Favorite Now Seen Heading to Runoff in Ecuador Vote

Ecuador’s bonds extended Wednesday’s gains. The securities maturing in 2030 rose 1.6 cents on the dollar to 58.8 cents, paring two days of steep losses following the first round on Sunday.

The count swung in Lasso’s favor as the National Electoral Council reviewed votes from precincts that had reported errors and had therefore not yet been fully accounted for. Pro-Perez demonstrators shouted accusations of fraud outside the council.

“I guarantee you that once we honestly know the results, we will accept the people’s decision,” Perez said on Twitter.

Citigroup Global Markets Inc.’s strategists said Perez is unlikely to close the gap and get into the second round, but they expect Lasso to be defeated by Arauz in the runoff as they say his campaign is losing positive momentum.

“Lasso had a quite weak performance in the first round, as voters leaned toward left-wing and anti-establishment candidates,” the bank’s strategists led by Dirk Willer wrote in a note. “We would expect these trends to work against Lasso also in a second round.”

Investor Favorite Now Seen Heading to Runoff in Ecuador Vote

Ecuador, which gets most of its export revenue from crude, bananas and seafood for its $108 billion economy, relies heavily on multilateral lending including an agreement with the International Monetary Fund. Lasso has vowed to uphold that deal and a recent restructuring of the country’s bonds.

Arauz, a 36-year-old protege of former President Rafael Correa, has campaigned on putting an end to austerity, providing cash payments to families and seeking alliances with ideologically-aligned countries.

Outgoing President Lenin Moreno, a former Correa ally who then broke with him after winning office, is not seeking re-election.

Ecuador’s foreign reserves stand at just $6.6 billion.

©2021 Bloomberg L.P.

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