S&P Upgrades Ecuador to ‘B’, Its First Rating Lift in Six Years
Ecuador · Economy
Key Facts
- —The action S&P Global Ratings raised Ecuador’s long-term sovereign rating to ‘B’ from ‘B-‘ on 14 August 2026, with a stable outlook.
- —The wait it was Ecuador’s first upgrade from S&P in about six years, ending a long stretch stuck at ‘B-‘.
- —The reason S&P cited stronger fiscal and debt management, plus better access to official and market financing.
- —The IMF anchor a US$4 billion IMF program agreed in 2024 was later topped up to about US$5 billion, backing President Noboa’s reforms.
- —The risk gauge Ecuador’s country-risk spread fell from about 2,016 basis points in late 2023 to roughly 460 in early 2026.
The one-notch move rewards two years of budget repair, but it still leaves the country’s debt firmly in speculative territory.
S&P Global Ratings has upgraded Ecuador’s sovereign credit rating to ‘B’ from ‘B-‘. Its first lift for the country in about six years.
The agency announced the one-notch move on 14 August 2026 and set a stable outlook. In plain terms, the firms that grade Ecuador’s debt now see a lower chance that it fails to pay lenders back.
A one-notch move out of a long freeze
For roughly six years, S&P had parked Ecuador at ‘B-‘, one of the lowest rungs it uses. On 14 August 2026, it finally nudged the score up to ‘B’.
The change is a single notch, not a leap. Still, after years of standing still, even one step signals that lenders’ fears are easing.
S&P also attached a stable outlook. That means the agency does not expect to move the rating again soon, in either direction.
Why Ecuador earned the S&P upgrade
S&P pointed to steadier public finances above all. Because the government has trimmed deficits and managed its debt more carefully, its ability to pay looks stronger.
The agency also flagged better access to money. Ecuador can now tap both official lenders and bond markets more easily than during its recent crisis years.
In short, the upgrade rewards results, not promises. The country has been proving, month by month, that it can fund itself without lurching toward default.
The IMF program doing the heavy lifting
Much of the repair sits on an International Monetary Fund deal. In 2024, the IMF approved a four-year program worth US$4 billion to support the reforms.
That figure later grew. During 2025 the arrangement was expanded toward about US$5 billion, giving the government more cash and more credibility.
The program comes with conditions, such as tighter budgets and structural changes. As a result, it acts as both a wallet and a discipline anchor.
What a ‘B’ rating really means
A ‘B’ grade is still deep in what markets bluntly call junk. It sits several notches below the safe ‘investment-grade’ band that big pension funds prefer.
In S&P’s own language, ‘B’ is ‘highly speculative’. The borrower can meet its commitments today, yet stays vulnerable if the economy turns.
So this is progress within the risky zone, not an exit from it. Ecuador is a safer bet than before, but far from a blue-chip one.
Cheaper borrowing, from already tighter levels
Ratings matter because they help set the interest a country pays. Generally, a higher grade lets a government borrow more cheaply on global markets.
The best gauge here is the country-risk spread, the extra yield investors demand over safe US debt. It had already fallen sharply before this upgrade.
That spread stood near 2,016 basis points in late 2023, then around 767 by August 2025. By early 2026 it had eased to roughly 460.
Because so much good news was already priced in, the fresh upgrade should trim borrowing costs only modestly. The heavy lifting happened over the past two years.
Ecuador runs on the US dollar
One quirk shapes the whole story. Ecuador scrapped its own currency in 2000 and has used the US dollar ever since.
That means the rating does not swing a local exchange rate, because there isn’t one. Instead, it works mainly through the price of the country’s dollar bonds.
Dollarization also raises the stakes of good management. Since the government cannot print money, it must earn or borrow every dollar it spends.
How the three big agencies now line up
S&P is not acting alone. Fitch upgraded Ecuador to ‘B-‘ from ‘CCC+’ in November 2025, a bigger jump off a lower base.
Moody’s followed in January 2026, lifting its grade to ‘Caa1’ from ‘Caa3’. Its scale runs differently, so ‘Caa1’ still sits below the others.
Taken together, all three have moved the same way. That rare alignment tells investors the improvement is broad, not the quirk of one analyst.
The politics behind the numbers
The reforms carry a clear political owner. President Daniel Noboa won re-election in the April 2025 runoff and now governs through to 2029.
His second term gives markets something they crave, namely time. Because the mandate is fresh, investors expect the budget squeeze to continue.
Even so, Ecuador’s recent history is turbulent, with past defaults and security shocks. Therefore the agencies still price in plenty of room for setbacks.
What to watch from here
The next test is whether the fiscal gains hold once the easy wins are gone. Analysts will track deficit targets and each IMF review closely.
A further upgrade is possible but not close. For now, the goal is simply to keep the score climbing rather than slipping back.
For ordinary Ecuadorians, the payoff is slow but real. Cheaper government debt frees up cash that can fund roads, schools and hospitals instead of interest.
Frequently Asked Questions
What did S&P do to Ecuador’s rating?
On 14 August 2026, S&P Global Ratings raised Ecuador’s long-term sovereign credit rating to ‘B’ from ‘B-‘ and set a stable outlook.
Is ‘B’ a good credit rating?
No. ‘B’ is still speculative or ‘junk’ grade, several notches below investment grade, though it is an improvement on ‘B-‘.
Why did S&P upgrade Ecuador?
The agency cited stronger fiscal and debt management and better access to financing, much of it anchored by Ecuador’s IMF program.
How does this affect Ecuador’s borrowing costs?
It should lower them modestly. Much of the improvement was already reflected in falling bond spreads over the previous two years.
Connected Coverage
Sources: S&P Global Ratings; Infobae/EFE; International Monetary Fund.
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