By September 14, 2016 Read More →

PDVSA bonds rise after swap proposal

PDVSA bonds

PDVSA bonds rose on Wednesday after the state-owned company announced a $7 billion debt swap proposal on Tuesday. Reuters photo by Carlos Jasso.

PDVSA bonds maturing in 2016, 2017 to be replaced by new bond maturing in 2020

CARACAS, Sept 14 (Reuters) – Venezuelan state oil company PDVSA’s bonds rose on Wednesday following a $7 billion debt swap proposal that could offer financial relief for the cash-strapped company that is struggling under low crude prices.

PDVSA on Tuesday announced a plan to replace bonds maturing in 2016 and 2017 with a new bond maturing in 2020 that will be backed by shares in its U.S. refining unit Citgo, with full details of the proposal expected to be released soon.

The company’s bonds rose across the board. The PDVSA 2017N bond, which is part of the swap offer, was up 2.6 points to a bid price of 79.15, its highest since September 2014.

Venezuela’s sovereign bonds on average rose to two-year highs, according to JPMorgan’s EMBI Global Diversified Index .

Wall Street analysts consulted about the offer said they needed more details to fully evaluate it.

After months of fretting about a possible default, investors in recent months have grown more optimistic that the OPEC nation will meet debt payments despite an economic crisis that has spawned triple-digit inflation and chronic product shortages.

President Nicolas Maduro notes that the ruling Socialist Party has never missed a bond payment and calls default speculation a smear campaign by adversaries to weaken his government.

(Reporting by Brian Ellsworth Editing by W Simon)

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