Venezuela Readies 2012 Debt Issuance

Venezuelan lawmakers have given the sovereign the go ahead to issue VEB71.2bn ($16.6bn) in debt this year, perhaps signaling a transaction is imminent. Already congress had approved a VEB86.9bn debt issuance ceiling for 2012, of which VEB25.8bn would go to service debt and VEB17.2bn to refinance debt outstanding, according to the congressional document. Venezuelan government officials expect an official announcement on the coming sovereign debt issue on Friday, according to a person familiar with the debt discussions. Government officials at the finance ministry could not immediately be reached for comment. As it is, the market is already anticipating that the sovereign will come out with a debt issuance almost immediately. Barclays Capital notes that the approval was earlier than expected and now expect Venezuela to issue a 2029 and/or 2032 with a size of at least $4bn and a coupon a touch below 12%. State oil company Petroleos de Venezuela, which does not require congressional approval to issue debt, is also expected to sell more bonds during a critical election year for President Hugo Chavez. On Wednesday, the sovereign’s benchmark 2027’s stood at 71.25, or 13.8% on a yield basis, and PDVSA’s 2017s traded for 64.5, yielding 14.8%.