Bloomberg News

PDVSA Said to Have Sold $1 Billion of Bonds to Central Bank

May 18, 2012

Venezuela’s central bank bought $1 billion of the $3 billion bonds sold by state oil company Petroleos de Venezuela SA as part of a private placement announced on May 11, a company official said.

State-run banks bought the remaining $2 billion, the official, who asked not to be identified because he isn’t authorized to speak publicly, said in an interview in Caracas yesterday. Banco de Venezuela, Venezuela’s largest bank, led purchases by buying $800 million, the official said.

PDVSA sold the 23-year bonds with an interest rate of 9.75 percent, higher than the 9 percent coupon on bonds sold in November. The Finance Ministry set the conditions in order to maintain the so-called implicit exchange rate when the bonds, which were bought in bolivars, are sold abroad for greenbacks, the official said. The central bank supplies U.S. currency to importers by selling dollar bonds through the Sitme currency market at 5.3 bolivars per dollar.

Armando Leon, a central bank director, declined to comment on the allocation of the bonds in an interview in Caracas today. Officials at Banco de Venezuela didn’t immediately return an e- mail seeking comment. PDVSA’s communications department said it had no information on the bond sale.

The securities due in 2035 won’t trade in secondary markets abroad for several months until the central bank, and state banks, begin to sell them through Sitme, the PDVSA official said.

November Sale

PDVSA’s last sale, which was issued directly to the central bank, was $2.4 billion of 9 percent bonds due in 2021. Those bonds were sold in November and began trading in Sitme in January. The oil company sold $10.3 billion of bonds last year, including securities with an interest rate as high as 12.75 percent.

“PDVSA did well to lower the coupon from when they sold bonds at 12.75 percent,” Leon said. “If it had gone to market earlier the coupon could have been lower.”

The yield on the 2021 bonds fell 17 basis points, or 0.17 percentage point, to 14.25 percent at 3:43 p.m. in Caracas, according to data compiled by Bloomberg. The bond’s price rose 0.68 cents to 73.13 cents on the dollar.

The Caracas-based oil company said April 17 that profit rose 42 percent in 2011 from a year earlier to $4.5 billion on $124.8 billion of revenue. Total debt rose to $34.9 billion at year end, a 40 percent jump from 2010.

Alternative Financing

PDVSA probably won’t sell more dollar bonds this year as the political environment becomes more turbulent ahead of October elections and after the company secured private loans from China, Japan and Korea, he said.

PDVSA has also agreed to form a special-purpose vehicle with a group of banks led by Deutsche Bank AG to finance a $500 million electricity plant in eastern Venezuela, the official said. PDVSA would repay the loan with crude oil and refined products, and the accord will be made public by the end of June, he said.

Amanda Williams, a spokeswoman at Deutsche Bank in New York, said she didn’t have an immediate comment.

To contact the reporters on this story: Daniel Cancel in Caracas at dcancel@bloomberg.net; Nathan Crooks in Caracas at ncrooks@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net


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