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Samstag, 8. Oktober 2016

"Whether or not it can stop the exchange, it is hard to say."

PDVSA bonds drop on lawsuit, exchange

21:54 (07/10) - Bron: IFR 

By Paul Kilby and Davide Scigliuzzo 
WASHINGTON, Oct 7 (IFR) - The fate of a debt swap from PDVSA 
was thrown in doubt on Friday after the Venezuelan oil company 
extended the deadline for the transaction and ConocoPhillips 
sued over the use of Citgo shares as collateral. 
PDVSA bonds suffered a multiple point drop as investors 
expressed concern that a failure to extend maturities on 
short-term debt would bring the state-owned company closer to a 
"We could be back to square one with an intense redemption 
calendar that makes it hard for PDVSA to cover," an investor 
attending the IMF and World Bank meetings in Washington told 
Intensifying the focus on the troubled oil exporting nation, 
Venezuela's central bank head Nelson Merentes was scheduled to 
attend a small gathering with investors organized by Deutsche 
Bank on Friday afternoon. 
Venezuelan bonds opened several points lower on Friday, with 
the 2017 notes initially down five to six points and the rest of 
the curve opening three to four points weaker, according to one 
They later clawed back roughly half of their intraday losses 
on the expectation that PDVSA may have to improve the terms of 
the offer for the second time since the exchange was launched on 
September 16. 
PDVSA's decision on Thursday to extend the early tender 
deadline of the swap to October 12 suggested to many that the 
company had received an underwhelming response to its offer, 
which targets US$7.1bn of bonds maturing in 2017. 
"As of the prior early tender deadline, substantially less 
than 50% of the aggregate principal amount of the existing notes 
have been tendered," the company said Thursday. 
PDVSA sweetened the transaction last month when it offered 
more new 2020 bonds backed by shares of its US oil unit Citgo in 
exchange for bonds maturing in 2017. 
The new terms were largely viewed as net present value (NPV) 
positive, but some investors preferred to hold existing bonds to 
benefit from the initial secondary pop on news of improved terms 
and the prospects of getting paid at maturity. 
"We are going to be free-riders," said a second investor at 
the IMF meeting, who noted that his Venezuelan holdings were his 
second-largest contributor to performance this year. 
But gains were reduced by the sell-off Friday sparked by the 
extended deadline and a lawsuit filed by oil producer 
ConocoPhillips against PDVSA in a Delaware court the day before. 
"This could be a bargaining tactic to dissuade some of the 
free-riders," said Sean Newman, a senior portfolio manager at 
In the complaint, ConocoPhillips said PDVSA's pledge of 
equity in Citgo as collateral for the bond swap was part of a 
fraudulent scheme to prevent Conoco from collecting compensation 
in an ongoing dispute with the Venezuelan government. 
The news was seen further complicating the swap and 
exacerbated worries about the sovereign, which already faces 
several arbitration claims from foreign companies. 
"It has become very complex legally," the first investor 
Others think that the latest claim from ConocoPhillips won't 
necessarily sabotage the exchange. 
"This is not the first time that this kind of suit has been 
made," said Newman. "Whether or not it can stop the exchange, it 
is hard to say."

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