PdVSA raising funds ahead of growing uncertainty
The oil company is selling the first new bonds from a Venezuelan state entity in more than a year. It is raising funds ahead of what analysts see as further economic and political deterioration.
Petroleos de Venezuela (PdVSA) is
sell $4.5 billion in new bonds, the first deal by the state
oil company or by the sovereign since May 2012.
The sale comes ahead of the next measure
of the government's popularity, the December 8 mayoral
"Polls are showing a strong decline in
President Maduro's approval rating, suggesting the possibility
of a heavy defeat for the government in December's mayoral
elections," Barclays said in a report. "A large setback for the
government here could further weaken Maduro's leadership,
limiting the government's capacity to make the necessary
Recent price controls are unlikely to
solve the inflation and scarcity problems, Barclays says.
Although authorities may express a willingness to make some
adjustments to economic policy, at this point it sees
government action as too little, too late.
Venezuelan bonds saw a "large" selloff
Tuesday, on the news of the PdVSA sale and the government's
decision to force electronics retailers to lower prices, Bank
of America Merrill Lynch says in a report.
The shop says it awaits the central bank's
scheduled release of its third quarter national accounts data
on or after November 18, for an indication of ability to pay
going forward. An improvement over the third quarter 2012
result of $2.3 billion seems likely, it says. However, BAML
expects the economy to contract by 3.3% year-on-year in the
"A deep contraction is a sign of
deteriorating conditions that are likely to continue to fuel
social instability, leading to continued governance concerns,"
not issued bonds since a $3 billion sale in May of 2012, and
the Venezuela sovereign has been out of the market since 2011,
according to Dealogic data.LF