Category: Venezuela
Venezuela: By any means
Post-Chávez Venezuela’s political and economic troubles are mounting as dollars become scarcer. By Girish Gupta
Venezuela patches finances to avoid default
Sovereign could look at alternative financing options amid lower oil prices
S&P cuts Venezuela
Heavy borrowing by OPEC-member raises concern amid prolonged economic problems
Vene ‘deterioration’ ahead with cabinet changes say economists
Analysts were pessimistic about this week’s changes to Venezuela’s cabinet, saying they pointed to further instability in the country’s economy
Cover story: Pragmatism undone
Changing trends in global capital flows may make it harder for populist governments to opt out of international capital markets. But as Argentina’s default shows, the path to pro-market policies is a complicated one. By Katie Llanos-Small
Venezuela’s Sicad II gets tentative thumbs up
New forex regime in Venezuela, which decriminalizes parallel market transactions, viewed positively
Harvest Exits Venezuela
Harvest Natural Resources has agreed to sell its 32% Venezuela’s Petrodelta in Venezuela to Argentina’s Petroandina for a total of $400m, it says. In the two-step deal concluding exclusive negotiation that started last month, Harvest is to sell its 80% interest in Harvest-Vinccler Dutch Holding (HVDH). Harvest would sell 29% of HVDH immediately for $125m, and sell the remaining 51% for $275m during 1Q2014. Proceeds of $330m will be used to pay Harvest’s long-term debt with the remaining proceeds used for working capital. The deal is expected to close by mid-year 2014. Bank of America Merrill Lynch advised Harvest.
Vene Dropped Again
Venezuela has seen another rating downgrade, this time to Caa1 from B2 by Moody’s. “Venezuela is facing increasingly unsustainable macroeconomic imbalances, including a skyrocketing inflation and a sharp depreciation of the parallel exchange rate. As government policies have exacerbated these problems, the risk of an economic and financial collapse has greatly increased,” the agency says. Inflation is “out of control” at more than 50%, and the parallel exchange rate has reached, 64 VEB/USD, or 10 times the official rate. Sovereign yields have reached more than 15% in early December from less than 10% in mid-May, suggesting the country’s ability to access markets has been “severely curtailed.” The outlook is negative. The move follows an S&P downgrade last week to B minus.
S&P Cuts Vene
S&P has lowered Venezuela’s credit rating to B minus from B, it says, due to a “radicalization” of economic policy. The results of recent municipal elections are likely to reinforce the recent trend toward government intervention, creating more uncertainty regarding the country’s economy. “We expect a continuation of erratic economic policies in Venezuela that, along with pressures on external liquidity and sustained political polarization, will exacerbate the government’s dependence on oil prices and weaken its capacity to manage adverse shocks,” the agency says. Particularly worrying for S&P is new legislation allowing for President Nicolas Maduro to rule by decree. Sustained political polarization and growing economic distortions could “materially increase” the risks for the government debt over the next two years. The outlook is negative.