“…the buyback is a pragmatic solution in which the government recognizes that there are holders who are not guilty in this situation and will be affected.”
In other words, the debt is illegal but it might not be fair to pay nothing to the poor innocent bystanders that get caught in the crossfire of our crusade for justice an the nasty horrid kapitalist pigdogs (err…that’s us gringos) so we’ll pay a bit to everyone, even the pigdogs.
Or in other other words, Ecuador is about to be eaten for breakfast by Elliott Assoc and friends. If the whole line of reasoning for default is that the debt is “illegal” but then they offer to pay, that offer immediately dilutes their own defence. Meanwhile they have the money to pay 100% of the bonds face value and a straightforward court action is likely to go the defaultees favour.
These people are toast. They just don’t know it yet.