Venezuelan Dollar Bonds Outperform Region as Yields Plunge: Caracas Mover

Venezuela’s bonds gained, pushing yields relative to Treasuries to the lowest level in a year, as signs U.S. economic growth is accelerating fueled demand for higher-yielding emerging-market assets.

The extra yield that investors demand to hold Venezuelan dollar debt instead of Treasuries shrank 56 basis points, or 0.56 percentage point, at 4:58 p.m. in New York to 1,073 basis points, the lowest since Feb. 8, 2011, according to JPMorgan Chase & Co.’s EMBI Global index. The yield differential has narrowed 80 basis points in the past week, compared with 33 for Latin American government debt, the index showed.

Venezuelan bonds, the highest-yielding emerging-market securities after Belize and Pakistan, rallied after a report today showed the U.S. jobless rate unexpectedly fell to the lowest level in three years. Oil, Venezuela’s top export, rose 1.5 percent to $97.80 a barrel. The Standard & Poor’s 500 Index increased 1.5 percent.

“There’s a huge rally today and my sense is that everyone is very bullish because of the U.S. data and that’s been a big positive for risk assets,” Jeff Williams, an emerging-market strategist at Citigroup Inc. in New York, said in a phone interview. With positive data in the U.S. economy pushing the S&P 500 higher, “people want to go long risk, and Venezuela is the cheapest place to do it in Latin America,” he said.

To contact the reporter on this story: Daniel Cancel in Caracas at dcancel@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net