Maduro Swaps Economy VPs

Venezuelan President Nicolas Maduro has named Oil Minister Rafael Ramirez as the country’s new vice president responsible for the economy, according to the government news agency, replacing Finance Minister Nelson Merentes. Merentes had been central bank governor until April, when he was moved to the finance ministry. He had been seen by analysts as pushing the country more towards a market economy. Ramirez has been the oil chief since 2002. Despite a selloff in the country’s bonds due to uncertainty about macroecoomic policy, analysts still see upside in the credit, as the country has the ability and willingness to continue servicing international obligations. Worries about Venezuela’s liquidity were “misplaced,” says Bank of America Merrill Lynch. “There is remarkably little in the data to suggest that Venezuela’s liquidity position is any different than what it has been during most of the past four years. We thus expect the selloff to revert as Venezuela’s capacity to service its debt obligations becomes clear,” it says. Venezuela’s 2027 bond slipped around 10 points, to just under 80 cents, at the end of September, according to data from the bank, after trading around par earlier in the year. “The policy paralysis does not suggest a near-term credit event unless authorities draw down their stock of external liquidity (which would take around three years of import growth similar to 2012 to reach three months of import coverage),” Jefferies says.