Venezuela would be forced to pay $400 million to investors who would hand over defaulted Ecuadorean bonds in return, according to Barclays.

``In the event of default, Chavez will be Correa's largest creditor,'' Grisanti wrote in a Nov. 14 report. Venezuela's position as a creditor would likely bolster the payout Ecuador would offer in a debt restructuring, he said.

Investor concern has also mounted that Argentina will default for a second time this decade amid the global economic slump and rout in commodities. Argentina's benchmark 8.28 percent dollar bonds due in 2033 trade at 26.25 cents on the dollar, down from 75 cents three months ago, according to JPMorgan Chase & Co.

Correa won a landslide victory in November 2006 after promising to rewrite the constitution and boost spending on the poor. He said in September that he'd suspend debt payments before trimming spending on education and health care.

`Collapsing' Prices

Ecuador's foreign debt totaled $10 billion as of September, according to Goldman Sachs Group Inc. That equals less than 25 percent of its $44 billion annual gross domestic product.

While the drop in oil has crimped revenue, Viteri said on Nov. 14 that Ecuador has the cash to make the $30 million payment on time.

The price on the 2012 bonds, which were issued as part of a restructuring in 2000, sank 28 cents over two days last week from 42 cents on Nov. 12, according to JPMorgan. The bonds traded at 99.5 cents on Sept. 8, a week before the failure of Lehman Brothers Holdings Inc. deepened the decline in oil.

``Bond prices are collapsing,'' said Igor Arsenin, an emerging-market strategist at Credit Suisse Group in New York. ``They are seriously considering defaulting.''