Venezuela's PDVSA pays bond, easing default fears

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Venezuelan state oil company PDVSA began making a major bond payment due on Friday, easing short-term worries about default but leaving the socialist government with less cash to attend to food shortages and economic depression.

Investors had fretted this week that cash-flow problems and regulatory hurdles resulting from US sanctions on the government of President Nicolas Maduro might leave the company unable to make the nearly 1 billion US dollars payment.

For years, bondholders have shrugged off Venezuela’s economic implosion, insisting Maduro’s willingness to pay and Venezuela’s substantial offshore assets made the high-yield debt a good bet.

But sources close to the government this week said Maduro had considered not paying, and that the last-minute approval came after intense discussions among cabinet members about the potential benefits of defaulting.

PDVSA “has knocked down the doomsday voices that were betting on economic meltdown and attacking the Venezuelan people, in conspiracy with the global economic oligarchy, with the aim of destabilizing and sabotaging the Bolivarian government’s economic advances,” PDVSA said in a statement.

PDVSA transferred 841.88 million US dollars in principal on the 2020 bond to accounts at JPMorgan, the statement said, without mentioning the outstanding 143 million US dollar coupon payment also due.

PDVSA’s 2017N bond, which comes due on Thursday, was up 7.150 points to a bid price of 96.500, according to Thomson Reuters data, while Venezuela’s 2022 bond was up 3.8750 points to bid 44.250.

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Source(s): Reuters