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Venezuela's PDVSA confirms $3 billion bond
May 12, 2012 / 1:16 AM / 6 years ago

Venezuela's PDVSA confirms $3 billion bond

* Coupon 9.75 percent, maturity 2033, 2034 and 2035

* Venezuela’s first issue of the year

CARACAS, May 11 (Reuters) - Venezuela’s state oil company PDVSA confirmed on Friday it was issuing up to $3 billion of bonds with a 9.75 percent coupon in a private offer for the Central Bank and other state banks.

The widely-anticipated issue is mainly intended to supply the Central Bank’s Sitme foreign exchange system, which sells dollars to Venezuelans, sources close to the operation said.

The bonds will mature in 2033, 2034 and 2035, PDVSA said in a statement, adding that the offer was intended to finance its investments, including in welfare programs.

The issue is Venezuela’s first of the year and might kickstart further borrowing to help President Hugo Chavez boost public spending ahead of an October election.

In recent years, PDVSA has enjoyed growing profits thanks to high global oil prices, but has also issued record amounts of debt to cover its own operating budget, transfers to central government, and heavy spending on social programs.

Sitme swaps dollar-denominated bonds through a system that provides hard currency at a rate of 5.3 bolivars to individuals and companies, whose requests for dollars at the official exchange rate of 4.3 bolivars per dollar, were not met.

It supplies less than 10 percent of dollars for imports, but has steadily increased sales to reach $40 million to $60 million per day from a historic average of $20 million per day.

Venezuela and PDVSA together issued around $17.5 billion in debt last year, with coupons that have approached 12 percent.

The country’s bonds have jumped in 2012 on signs that Chavez’s health may be worsening during cancer treatment, which investors believe could pave the way for a change in government that would promote more market-friendly policies. (Reporting by Deisy Buitrago and Andrew Cawthorne; Editing by Bernard Orr)

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