PDVSA Hints at Jumbo Bond Issue

Venezuelan state-owned oil producer PDVSA has given a little more clarity on its long-rumored bond sale. The issuer plans an up to $3bn equivalent issue “soon,” according to the government news agency, which cites finance minister Ali Rodriguez. Central bank president Nelson Merentes says the issue will consist mainly of 2011 zero-coupon bonds that are repayable in dollars, according to wire and local news reports. The government has not indicated how it will manage such a sale. No international banks appear to have been mandated, according to New York-based DCM bankers. PDVSA was downgraded earlier this month by S&P to B+ (negative) from BB minus to reflect tighter liquidity and a heightened uncertainty regarding willingness to meet contractual obligations with some suppliers. The bonds were knocked down by the news, and S&P also notes that the company may be constrained in its ability to attract foreign investment. Fitch rates it B+ (stable) and Moody’s has it at B1 (stable).