Venezuela's state oil company PDVSA is preparing a major swap of its 2016 and 2017 bonds to ease looming debt payment burdens, a senior source at the company said.
The company, the socialist government's financial engine, is currently scheduled to pay about $6 billion of debt and interest in 2015, about $5.5 billion in 2016, and more than $7 billion in 2017, according to Wall Street analysts.
That has put pressure on its cash position at a time of falling crude prices.
So it is hoping to persuade bondholders to exchange 2016 and 2017 paper for others maturing between 2020-2023 when it anticipates having a healthier financial position.
"The debt restructuring plan is advanced and could be offered to investors starting from the first quarter of next year," said the source, who is familiar with the plan but asked to be anonymous as he is not authorized to comment publicly.
"The idea is to focus on the debt maturing in 2016 and 2017 because they are the most complicated years. We're just waiting for a better time," he told Reuters late on Thursday.
The Venezuelan government this week paid around $1.56 billion to service its Global 2014 bond VENGLB14=RR and interest, admonishing what it called a "perverse" international campaign to foster default fears.
Some concern had emerged, with bond yields spiking, after the publication last month of an article by two economists critical of President Nicolas Maduro's government, suggesting an orderly default could help the OPEC country's slumping economy.
Wall Street analysts, however, largely disagreed, saying the Maduro government was showing no sign of considering a default and still-strong oil revenues remained an important guarantee despite Venezuela apparently entering recession.
"There are some manipulations out there," Maduro said in a speech late on Thursday, noting that Venezuela had paid its obligations this week 24 hours before they were due.
"Venezuela has not fallen nor it will fall into default. Those who are in moral default, in ethical default, are these professional opinion-givers doing business against our nation ... We are prepared to fulfil all our obligations at every level."
Market sentiment over Venezuela's financial health and future payment possibilities has, however, deteriorated in recent months, with the JP Morgan emerging markets index 11EMJ putting Venezuelan bond yields 14.38 percent above U.S. Treasuries.
That makes its risk perception worse even than conflict-torn Ukraine.
"Optimism in the market over Venezuela has evaporated a lot," said Francisco Ghersi, head of Caracas-based Knossos Fund, which trades only in Venezuelan bonds, saying investors were worried about the government's position two or three years away.
The PDVSA source said the hoped-for bond swap would come after PDVSA cancels its $3 billion 2014 paper VE046054644=RRPS due on Oct. 28. It has already bought "at least the half" of that 2014 debt, using pension fund resources, and also hopes to swap those for other papers, he said.
The socialist government, in power since 1999 under Hugo Chavez who died last year and was replaced by Maduro after he narrowly won election, has never defaulted on its bonds.
It faces average annual repayment obligations of roughly $10 billion in the next three years, between sovereign debt and PDVSA paper, according to Wall Street analysts.