ECUADOR BONDS YIELDS INCREASE AS MARKET FEARS DEBT DEFAULT

The deteriorating state of Ecuador's banking system and increased risk of a default on its external obligations has pushed up the country's bond yields, making it the world's second riskiest market after Russia. Joyce Chang, emerging markets debt strategist at Merrill Lynch in New York, said it would be wrong to compare Ecuador with Russia, which defaulted on its domestic debt last August. Unlike Russia, Ecuador is not in imminent danger of insolvency and the size of its domestic debt is negligible. Ms. Chang said the sharp falls in the price of its Brady bonds reflected the extreme risks investors were facing. "Ecuador's government only has two options: either to take difficult steps to secure IMF support, or to go into a downward spiral."