(Bloomberg) -- Concerns about Citibank’s reported resignation as payment agent leading to default “misplaced,” Francisco Rodriguez, chief economist at Torino Capital, says in e-mailed note.

PDVSA Can Pay Bondholders After Citi Resigned as Agent: Torino

Tuesday, September 06, 2016 08:06 pm

by Jose Orozco

(Bloomberg) -- Concerns about Citibank’s reported resignation as payment agent leading to default “misplaced,” Francisco Rodriguez, chief economist at Torino Capital, says in e-mailed note.

• Citibank cannot stop acting as payment agent until new one is found, appointed
• Greater concern is whether PDVSA may have trouble finding paying agent for new issuances needed to carry out bond swap, which may indicate “broader perceived compliance risks for US financial institutions” dealing with Venezuela
• Continued improvement in basic needs indicators sensitive to housing policy shows govt’s emphasis on low-income housing construction has positive effect on well-being of poorest families
  • This may have partially offset increased deprivations brought on by contracting real incomes and explain why govt has not suffered stronger decline in support among poor households
• Torino estimates 714.6k people attended opposition’s Sept. 1 demonstration, 112.5k attended govt’s rally same day
  • Expects recall referendum to be held after Jan. 10 in 2017
• NOTE: From Aug. 30, Citibank Said to Cease Being PDVSA Bond Payment Agent: Nacional