PdVSA Defines Bond Sale

Petroleos de Venezuela (PdVSA) has come out with additional information on this week’s $4.5bn bond sale. The 6.0% coupon 2026 notes will feature amortization payments in each of the final three years, it says. The bonds will be sold in a private placement, with proceeds to be used for corporate finance and investment. Some $3bn is to be sold to PdVSA suppliers and the remainder placed with the country’s central bank. Officials at the state-owned oil producer were unable to provide additional details, including the exact timing of the transaction, which Oil Minister Rafael Ramirez had indicated in public remarks would be this week. The transaction is rated B. PdVSA has not issued bonds since a $3bn sale in May of 2012, and the Venezuela sovereign has been out of the market since 2011, according to Dealogic data. Analysts say the deal is done this week to come out ahead for the December mayoral elections – the government’s next big test of popularity, which they see deterioration along with the economy. “Polls are showing a strong decline in President Maduro’s approval rating, suggesting the possibility of a heavy defeat for the government in December’s mayoral elections. A large setback for the government here could further weaken Maduro’s leadership, limiting the government’s capacity to make the necessary economic adjustments,” Barclays says.