The IDB has approved a $700m loan to finance the modernization of the turbines of Venezuela’s Guri hydroelectric project, increasing power by 795MW. Venezuela will contribute a total of $609m in counterpart funds to the project, which will have a total cost around $1.3bn. The IDB loan is for 20 years, with a 6-year grace period and an interest rate based on Libor. Separately, the IDB has approved a $120m loan to the Dominican Republic to help enhance competitiveness. The IDB financing consists of a $110m loan with an amortization of 20 years, a grace period of 5 years and an interest rate based on Libor. The other $10m loan has an amortization of 15 years, a grace period of 5 years and an interest rate based on Libor. The multilateral does not comment on the loan spreads.
Category: Venezuela
Chavez Nationalizes Owens-Illinois
Venezuelan president Hugo Chavez announced he will nationalize the local operations of US-based glass packaging maker Owens-Illinois, but the company says it has not heard directly from the Venezuelan government. It adds that these operations account for under 5% of its global segment operating profit. The operations include 2 plants that employ more than 1,000 people.
PDVSA Sells $3bn Bond
PDVSA says it has issued $3bn in new 2017 bonds, getting nearly $7bn in demand from 105,307 orders. The B+ 8.5% bond priced at par. As with previous government offerings, the offer is directed at individuals and businesses with the “sector productivo nacional,” what Venezuela calls businesses that are strategically important the nation’s economy and investors will be allowed to buy the dollar-denominated bonds with Bolivars at a VEB4.30 per dollar rate. Separately, PDVSA will offer holders of its 0% 2011 bond new 8% of 2013 bonds at an exchange rate of $1,125 per $1,000 if done by October 28, and $1,095 per $1,000 if done later. Citi ran the new issue and is managing the liability management.
Fitch Studies FertiNitro Nationalization Impact
FertiNitro Finance’s nationalization by the Venezuelan government does not trigger an immediate acceleration of debt, Fitch says. The agency, which has a CCC (negative) rating on the company’s $250m 2020 bonds, says the company has always honored debt obligations, but that after the nationalization, the status of debt obligations is unclear. FertiNitro says that Pequiven, the state-owned company of which it is now a subsidiary, intends to support its debt obligations, but Fitch says details of such support are unclear. The agency does say, however, that the government of Venezuela has not prevented payment of debt obligations of strategically important nationalized companies.
Correction: PDVSA Launches Bond Sale, Swap
An October 19 daily brief entitled “PDVSA Launches Bond Sale, Swap” incorrectly states the coupon on a bond and the exchange price offered to holders. It is a 0% 2011 bond, and holders will receive $1,095 per $1,000 if participating after the October 28 early acceptance date.
BP Sells Vene Assets
UK-based oil company BP confirmed yesterday that it is selling assets in Venezuela and Vietnam to Russian peer TNK-BP for $1.8bn. BP also declined to comment on the potential value of those assets, though they have been estimated at $1bn, according to an industry banker not associated with the deal. In Venezuela, TNK-BP, a 50/50 joint venture between BP and several Russian businessmen, says it will acquire from BP a 16.7% equity stake in the PetroMonagas extra heavy oil producer, a 40.0% stake in Petroperija, which operates the DZO field, and a 26.7% stake in Boqueron. These assets operate as joint ventures with PVDSA and have a combined capacity of 25 thousand barrels of oil equivalent per day. The buyer says the acquisitions will be financed through cash on hand and will not require additional capital from the shareholders of TNK-BP. A deposit of $1bn will be made by October 29, with final payment upon completion. Goldman Sachs and HSBC acted as BP’s financial advisors, says a company spokesman, while TNK-BP’s board was advised by Lexicon Partners and management by Credit Suisse.
PDVSA Launches Bond Sale, Swap
PDVSA plans to swap 2011 bonds for 2013s in an offer to investors through November 12 and offer new 2017 bonds through the end of the week. The Venezuelan state-owned oil company will sell the $3bn worth of B+ 8.5% of 2017s at par in an offer through Friday. As with previous government offerings, the offer is directed at individuals and businesses with the “sector productivo nacional,” and investors will be allowed to buy the dollar-denominated bonds with Bolivars at a VEB4.30 per dollar rate. Results are set to be announced Monday. Separately, PDVSA will offer holders of its 6% 2011 bond new 8% 2013 bonds at an exchange rate of $1,125 per $1,000 if done by October 28, and $1,015 per $1,000 if done after. Citi is managing both processes.
PDVSA Sells 50% of Ruhr Oel
PDVSA has agreed to sell a 50% stake in Ruhr Oel GmbH to Russian oil and gas company Rosneft for $1.6bn excluding PDVSA’s share of crude inventory and receivables to be valued at closing, according to the buyer. Ruhr Oel GmbH is a 50/50 downstream JV between BP and PDVSA with stakes in 4 German refining and petrochemical complexes. Venezuela’s national assembly has also approved a 60/40 JV between PDVSA and ENI Lasmo, a subsidiary of Italian oil company ENI to develop Junin Block 5. According to a statement from the national assembly, the block is expected to produce up to 240,000 barrels of super heavy crude a day.
BP Reported Selling Venezuela Assets
A BP spokesman declines to comment on statements by German Khan, CEO of BP joint venture TNK-BP, stating that his company would acquire several of the oil company’s assets in Venezuela. According to press reports, Khan told reporters TNK-BP would acquire 16.7% of Petromanagas, 40% of Petroperija and 26.6% of Bougeron. BP also declined to comment on the potential value of those assets, though they have been estimated at $1bn, according to an industry banker not associated with the deal. Khan has been looking for assets to acquire in LatAm, the banker says, but this is his first acquisition of oil assets on the continent. He had previously acquired non-oil & gas assets outside of Venezuela, the banker says.
Venezuela, Argentina Get CAF Financing
Venezuela is getting 2 loans worth a total $700m from CAF, one for $600m to finance the Tocoma hydroelectric plant and the other, for $104m, to improve mass transit. CAF also approved a $500m loan for Argentina to be invested in an electric power line project. Terms were not released.