“Taking place on Dec. 29 with no approval by the National Assembly and no promulgation notice in the Official Gazette, this smells of some kind of end of the year financial shenanigan from a government that is out of cash and is desperately trying to hide it,” he said in an e-mailed response to questions.

Venezuela Government Said to Sell $5 Billion of New Dollar Bonds

by 

Noris Soto

 and 

Nathan Crooks

2. Januar 2017, 19:28 MEZ

• Bond matures in 2036 and has coupon rate of 6.5 percent
• Central government last sold dollar debt in October 2011

Venezuela’s central government has issued new dollar debt for the first time in more than five years, selling $5 billion of the notes to state bank Banco de Venezuela SA and the central bank, according to a senior government official.

The bond, which was issued Dec. 29, matures in 2036 and has a coupon of 6.5 percent, according to data complied by Bloomberg. The government official, who wasn’t authorized to discuss the issuance publicly, didn’t provide additional details.

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Cash-strapped Venezuela has been forced over the past several years to reduce imports of essential items including food and medicine to stay current on its foreign debt obligations. In October, state oil company Petroleos de Venezuela SA completed a swap in which creditors holding $2.8 billion of bonds agreed to extend maturities after weeks of tense negotiations that included dire warnings from Caracas of a possible financial collapse.

The few details known about the new bond issuance -- the first such sale since October 2011 -- suggest it might be linked to Chinese lending, according to Francisco Rodriguez, the chief economist at Torino Capital in New York.

Speculation Mounts

“My guess - but it’s just a guess - is that given uncertainty as to whether Venezuela would be able to deliver the oil necessary for repayment, the Chinese may have asked for the loan to be also guaranteed with a bond,” he said in an e-mailed response to questions, adding that he had been expecting a disbursement of $5 billion related to the renewal of a loan from China.

Venezuela’s finance ministry didn’t immediately answer telephone calls or respond to an e-mailed message sent seeking comment.

Venezuela’s benchmark dollar bond that matures in 2027 saw its price rise from 41.13 cents on the dollar at the start of 2016 to 51.25 cents on Dec. 30. It currently yields 20.7 percent, according to data compiled by Bloomberg.

Bond markets will likely react with “befuddlement” when they open back up on Tuesday after being closed on Monday for the New Year’s holiday, said Russ Dallen, a managing partner at Caracas Capital.

“Taking place on Dec. 29 with no approval by the National Assembly and no promulgation notice in the Official Gazette, this smells of some kind of end of the year financial shenanigan from a government that is out of cash and is desperately trying to hide it,” he said in an e-mailed response to questions.

https://www.bloomberg.com/news/articles/2017-01-02/venezuela-government-said-to-sell-5-billion-of-new-dollar-bonds-ixgf5pwk