FINANCIALS | Wed Sep 7, 2016 2:15am IST

Venezuela's PDVSA says Citi to remain as paying agent for bonds

Venezuelan state oil company PDVSA said on Tuesday that Citibank will remain in charge of making payments on its bonds, a week after Reuters reported that Citi had announced its intention to withdraw from that role.

"It is false that there has been a substitution of Citibank as paying agent for our (financial) instruments," PDVSA said in a statement. "If there is any change with respect to this, (PDVSA) will announce this in a timely and responsible manner.

The company assured that Citibank would be in place as paying agent for PDVSA's upcoming maturities.

The bank did not immediately comment on PDVSA's statement, but in the past has said it cannot discuss issues involving its clients.

Citibank, a unit of Citigroup, in July told bondholders PDVSA would need to name a new paying agent for seven outstanding dollar-denominated bonds, according to three investors who asked not to be identified.

But it also said it will continue to serve as PDVSA's paying agent until it receives written notice that PDVSA has found a new agent, according to a letter from Citi to bondholders seen by Reuters. Citi confirmed the veracity of the letter but declined to comment further.

PDVSA, which is struggling under low oil prices and a collapsing socialist economy, in November must make a $2.05 billion amortization on its 2017N bond and a $1 billion maturity payment on its 2016 global bond.

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Citigroup's decision will not interrupt payment of these securities.

But it could interfere with plans announced by PDVSA President Eulogio del Pino to swap 2017 bonds for new bonds with a later maturity, as the new bond would not have a paying agent.

Sources last month told Reuters the company has begun discussions with Credit Suisse for such a swap, but bondholders and investors say they have not been approached by PDVSA.

Citibank in July said it planned to halt correspondent bank services for the Venezuelan government's foreign currency accounts, citing a periodic risk management review. (Reporting by Eyanir Chinea, writing by Brian Ellsworth; Editing by Bernard Orr)

http://in.reuters.com/article/venezuela-citigroup-idINL1N1BI1MC