(Updates with analyst comment in fourth paragraph.)
Feb. 21 (Bloomberg) -- Venezuelan President Hugo Chavez said that he needs another operation in his battle with cancer after doctors found a new lesion, just eight months before the country’s presidential election.
Tests taken in Cuba in the past few days showed a lesion of about 2 centimeters in diameter in the same area where a tumor was removed in June, Chavez, 57, said today on state television from his home state of Barinas. Doctors will remove the growth to see if it is malignant or not, he said.
Chavez is preparing to begin campaigning for the Oct. 7 election in his bid to extend his 13-year rule until 2019. The need for another operation and questions over his true condition may swing undecided voters to the opposition’s younger candidate, Henrique Capriles Radonski, Boris Segura, a strategist at Nomura Securities International in New York, said today in a phone interview.
“Chavez is the favorite to win the election if he’s healthy, but this relapse and others going forward will weaken his chances,” Segura said. “If his health status isn’t clear, I think that will be a headwind on the elections.”
The president spoke today in public for the first time since Feb. 17 and after a columnist for El Universal, Nelson Bocaranda, said yesterday that Chavez was flown to Cuba for medical tests to review the need for another operation.
Venezuelan bonds rallied today on the prospect of a change in government and policies that have fueled the region’s highest inflation rate and dried up investment.
“I totally deny that I have metastasis in the liver or that the cancer has spread throughout my body and that I’m dying,” Chavez said today on state television alongside his brother and daughter. “There will be another surgery. I regret having to give this negative news during Carnival but I’ve been forced to due to the rumors.”
Chavez had two operations last year in Cuba after an undisclosed form of cancer was discovered in June. Since then, he has received chemotherapy and said that he is “free of illness.”
The opposition chose Capriles, a 39-year-old governor of Miranda state, to challenge Chavez in October after holding a primary election on Feb. 19. Capriles, who says that he will maintain popular social programs while gradually unwinding state control over the economy, says that he wishes Chavez a long life to see the changes coming to Venezuela.
The yield on Venezuela’s benchmark 9.25 percent bonds maturing in 2027 fell 23 basis points, or 0.23 percentage point, to 11.66 percent at 2:45 p.m. in New York, according to data compiled by Bloomberg. The bond’s price rose 1.38 cents to 82.88 cents on the dollar.
The extra yield that investors demand to own Venezuelan debt rather than U.S. Treasuries fell 31 basis points to 10.22 percent, according to JPMorgan Chase & Co.’s EMBI Global index. That’s the lowest since May 2010, and compares with a drop of nine basis points on average in Latin America today.
Chavez has increased his public appearances since returning from medical tests in Cuba in October while his hair grew back after halting chemotherapy treatment. In January he spoke for 9.5 hours during an address to the National Assembly, his longest speech ever.
The columnist Bocaranda, citing unidentified sources in Cuba, said that doctors have recommended that Chavez stop using steroids that may have made him appear healthier.
“The probability that President Chavez could not be a candidate has increased after this announcement,” Barclays Capital analysts Alejandro Arreaza and Alejandro Grisanti wrote in a note to clients. The election could also be postponed, though no later than the end of the year, they said.
Chavez said that he’ll provide more information tomorrow after meeting with his doctors and government officials.
During the time that he was recovering from surgery in Cuba in June, Chavez signed laws from Havana and appeared in taped videos broadcast on state television.
--Editors: Philip Sanders, Robert Jameson
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