Petroleos de Venezuela SA, the state oil company, may repay part of a $3 billion debt with the central bank by giving it dollar-denominated bonds before year end, a government official said.
PDVSA, as the oil producer is known, may issue the bonds to the central bank in a private placement to settle part of a debt stemming from loan agreements, said the official, who asked not to be identified because he isn’t authorized to speak publicly about the matter. The bank and PDVSA are still negotiating terms of the transaction, he said.
PDVSA would issue more of one of its existing bonds to the central bank if it proceeds with the transaction, the official said. He declined to say how much PDVSA would issue or which maturity would be chosen.
“The market expects PDVSA to do something, either a direct placement with the central bank or a new issue with part of the securities going to the bank to repay the loan,” said Jeff Williams, an emerging-market debt strategist at Citigroup Inc. in New York. They can do a private placement of about $1 billion without sparking declines in the bonds, he said.
An official at PDVSA’s press department declined to comment. Press officials at the central bank didn’t immediately respond to an e-mail seeking comment.
PDVSA has already sold $7.93 billion of bonds this year, $4.93 billion of which have been through private placements with the central bank. The central bank then sells the dollar-denominated securities to importers through its currency market known as Sitme.
The Caracas-based oil producer has $25.4 billion of dollar bonds outstanding, according to data compiled by Bloomberg. PDVSA has more than $9 billion of debt due in 2017, the most of any year.
The yield on PDVSA’s 12.75 percent bonds due in 2022, which were sold in February, rose 30 basis points, or 0.30 percentage point, to 17.01 percent, at 4:08 p.m. in Caracas, according to prices compiled by Bloomberg. The bond’s price fell 1.22 cents to 79.59 cents on the dollar.
The bond’s yield has plunged 226 basis points since reaching a high of 19.27 percent on Sept. 28.
“I don’t see PDVSA retapping an earlier issue because they already have high principal due in those years,” said Alejandro Grisanti, a Latin America economist at Barclays Capital in New York. “They should just issue a new bond.”