PDVSA and Chevron have agreed to terms for a $2bn financing for their Petroboscan joint venture, PDVSA says. The US oil producer is providing “long-term” loan at a rate of Libor+4.5%. It does not state the exact tenor, but says the last payment is scheduled for 2025. Petroboscan, operated by the two since 2006, plans to use the proceeds for increasing oil production in the Boscan oil field. The parties involved did not respond to request for additional comment.
Category: Venezuela
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Chavez Looks to Raise Debt Ceiling
Venezuela’s government hassent congress a bill to raise the country’s debt ceiling of 37%, or VEB30bn ($6.9bn), according to local news reports citing remarks from government officials. “It has become customary for the government to raise the debt ceiling at this time of the year. Although in our view, most if not all of the additional debt will be issued locally, the possibility of USD denominated debt issuance cannot be ruled out,” Citi says in a report.
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CAF Gets Ratings Lift
Moody’s has upgraded Corporacion Andina de Fomento (CAF) to Aa3 from A1, it says. The agency highlights CAF’s broadening membership and improved member credit quality, stronger capital adequacy ratios, enhanced risk management capabilities and increased loan portfolio diversification.The outlook is stable.
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US E&P Exits Vene
Harvest Natural Resources has agreed to sell its 32% stake in a Venezuelan oil exploration project to Indonesia’s PT Pertamina for $725m, it says. The all-cash sale concludes a process that the US-based oil company had initiated in March. In the deal, PT Pertamina acquires the stake in the Petrodelta project, of which PDVSA is a partner, by buying Harvest’s 80% stake in Harvest-Vinccler Dutch Holding BV. Net proceeds are expected to be $525m. The transaction is subject to government approval in Venezuela and Indonesia, as well as by shareholders. The boards of Harvest and Pertamina have each approved the transaction. As of end 2011, the Petrodelta venture controls roughly 194m barrels of oil in 3P reserves, a combination of proved, probable and possible reserves held underground, a 1% decline from 2010, following Harvest’s reserve review.
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CAF Jumps through Issuance Window
CAF took advantage of a market rally to print a new $600m bond Thursday, the first step in a liability management operation. In a deal following Swiss and Hong Kong issuance last week, the A1/A+/A+ Andean multilateral drew more than $2bn in orders, and got a tiny new issue premium. “The timing was perfect and resulted in a good transaction,” CFO Hugo Sarmiento tells LatinFinance, noting that the sovereign saw a window of opportunity amid recent volatility, for what is typically its annual visit to the dollar market. The 2022 bond priced at 99.225, with a 4.375% coupon, to yield 4.472% or UST+282.5bp, at the tight end of 287.5-area guidance, which followed 300bp talk. “It was too tight at 10bp-15bp on top of the 2019s.This is a credit that is liked and bought by insurance companies, which don’t mind the flatter curve,” says a West Coast EM portfolio manager. Sarmiento says CAF offered zero to little new issue premium, after spotting the 2019 bonds at UST+270bp on an interpolated basis and adding 20bp for the curve extension from 7 to 10 years. Demand was heard driven by US institutional accounts (50%), with participation from Europe (30%) and Asia and Latin America (20%). A total of 138 accounts participated, including institutions, private banking, retail and insurance. At the same time, CAF has launched an offer to exchange its existing 8.125% 2019 and 5.750% 2017 bonds for more of the newly issued 2022 bonds. Accepting holders are to get $1,278 for each $1,000 tendered of the 2019s and $1,135.91 for each $1,000 of the 2017s, in an offer closing Tuesday. Deutsche Bank, Goldman Sachs and HSBC managed the bond sale and are handling the exchange offer. Last week, CAF issued a CHF175m ($180m) 2.5-year floating-rate bond at par with a coupon of 3-month Libor+145bp, through Credit Suisse. It also tapped the Hong Kong market for HKD398m ($51m) in 12-year bonds priced at par with a 4.00% coupon, via Goldman Sachs.
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CAF Continues Diverse Funding Amid Volatility
Regional development bank CAF has landed bond transactions in Switzerland and Hong Kong. The Andean development bank issued a CHF175m ($180m) 2.5-year floating-rate bond at par with a coupon of 3-month Libor+145bp. The price represents a 20bp increase from its last issuance, of CHF125m in February. CAF CFO Hugo Sarmiento tells LatinFinance that while spreads have widened due to volatility, the conservative Swiss market is open to a few select issuers, and represents geographic and investor diversification. Credit Suisse managed. A1/A+/A+ rated CAF also tapped the Hong Kong dollar market, for HKD398m ($51m). The 12-year bond priced at par with a 4.00% coupon. Goldman Sachs led that transaction. The two transactions follow a $50m-equivalent 30-year note issuance in the Taiwanese market in April.
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PDVSA Set for $3bn Bond
As anticipated, Venezuela’s PDVSA has announced a new bond issue, for $3bn, to be sold to the country’s central bank. The 2035 bonds will come with a 9.75% coupon, and amortize in 3 equal parts in each of the final 3 years. The state-owned oil company plans to use proceeds for general corporate purposes and social projects. The issue was expected by analysts following the government’s lifting of a debt ceiling earlier this year, ahead of increased spending ahead of elections.
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Sovereigns Plot Debt Issuance
While some of LatAm’s larger sovereigns, including Mexico, Colombia and Peru, have addressed debt fundraising needs earlier in the year, others are looking to take advantage of what are still seen as attractive issuing conditions. Guatemala is heard eyeing the international bond market after closing a request for proposal (RFP) process last month. Last year it mandated Deutsche Bank as it looked to raise up to $500m in the international bond market, but didn’t follow through with a transaction. “In Guatemala we like to be prepared as in previous years, in case the window of opportunity is open to issue, but it doesn’t mean we will proceed with a bond issuance,” says a finance ministry spokesperson, declining to provide further details. Guatemala was last in the dollar market in 2004 when it priced a $330m 30-year at par to yield 8.125% through Citi, according to Dealogic data. Separately, Empresa Nacional de Autopista (ENA), a corporation wholly owned by the Republic of Panama, is planning a toll road securitization similar in structure to last year’s Corredor Sur transaction, as it seeks to help fund the purchase of Panama’s Corredor Norte tollroad from operator PYCSA. HSBC and Global Bank are set to manage, as they did the first deal. Panamanian officials said last year that the government sought to buy a majority stake in the troubled toll road in a transaction of around $650m. The bond size is expected to be larger than that amount, and will be issued through one of ENA’s subsidiaries. Last year’s $395m 8 and 14-year issuance was divided into international and domestic portions, each pricing at par to yield 5.75%. Proceeds were used to refinance existing bonds that had financed the Corredor Sur road. Also, Venezuela may be considering a new sale as soon as this week. “There is clear urgency to feed USD locally, and this week is when everyone is back and it’s a more active market to tap the window,” says Siobhan Morden, managing director and head of LatAm strateg
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Vene Outlook Negative: Fitch
Fitch has changed the outlook on Venezuela’s B+ rating to negative from stable, it says, based on a weakening policy framework. The agency sees increased vulnerability to commodity price shocks and deterioration in fiscal and external credit metrics as well as rising political uncertainty related to the 2012 electoral cycle. The main issues are “an exchange rate regime that leads to macroeconomic distortions and rising foreign currency indebtedness, a markedly expansionary fiscal policy and the transfer of the country’s oil windfall to opaque off-budget funds have weakened Venezuela’s external and fiscal credit metrics as well as increased its dependence on high oil prices,” Fitch says. The sovereign’s external liquidity and the sovereign’s net external position have deteriorated vis-a-vis peers in the “B” category and oil exporters in spite of large current account surpluses in recent years.
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Market Awaits Venezuela’s Delayed Debt Issuance
Venezuela’s delayed foreign debt issuance this year has left many in the market expecting a large bulk sale sometime before the October presidential elections. Barclays capital expects the country to issue dollar-denominated instruments sometime during the second quarter, especially now that President Hugo Chavez issued a public decree eliminating the government debt ceiling for the year. “We see increasing pressures to issue in the coming months, particularly from the exchange market and after this reform, the barriers that could have limited the government to issue have been eliminated,” the bank says. Prior to the change in the finance law, Venezuela had a debt ceiling that limited the country’s issuance this year to a further at least $12bn, at least $5.5bn of that in dollar-denominated debt. At this point Chavez has plenty of money to cover state spending plans but an appreciating dollar in the parallel market is pressuring the government to issue dollar-denominated IOUs. The unofficial exchange rate has lately reached VEB9 per dollar, up from an average of VEB5 per dollar last year, by Barclays’ estimates. The sovereign has financed almost $8bn in Bolivar-denominated debt issued locally year to date, a speed of issuance that could cause the sovereign to run into the congress-approved debt limit for the year sometime soon. Dollar-denominated debt issuance by the state controlled oil company PdVSA, however, is not subject to that lawmaker dictated limit and Barclays analysts expect the oil company to play a part in meeting the state’s dollar-debt issuance plans this year.