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Venezuelan Bonds Rally on Chavez Health Concerns: Caracas Mover

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Feb. 21 (Bloomberg) -- Venezuelan bonds rallied on speculation President Hugo Chavez’s health is worsening after a columnist for El Universal newspaper said that he may have traveled to Cuba for medical tests related to cancer.

The yield on Venezuela’s benchmark 9.25 percent bonds due 2027 fell 6 basis points, or 0.06 percentage point, to 11.82 percent at 10:43 a.m. in New York, according to data compiled by Bloomberg. The bond’s price rose 0.38 cent to 81.88 cents on the dollar.

Nelson Bocaranda, a columnist for Caracas-based El Universal, said yesterday that Chavez traveled to Cuba to meet with a team of doctors to decide whether to undergo a third operation after having a cancerous tumor removed in June. Venezuelan Information Minister Andres Izarra denied the report yesterday on his Twitter account.

“Rumors of Chavez being back in hospital for emergency surgery in Cuba began to circulate among traders over the long weekend,” Russell Dallen, head bond trader at Caracas Capital Markets in Miami, said in an e-mail. “The health rumor has put a bid under Venezuela bonds among those hoping for regime change.”

Chavez, 57, underwent chemotherapy treatment last year and has said that he’s “free of illness” as he prepares to run for re-election in October. He hasn’t revealed what type of cancer he had or released any medical reports. He last appeared in public on Feb. 17.

Bocaranda also said on his Twitter account that Chavez’s mother, siblings and children traveled to Cuba to be with him.

Diosdado Cabello, the head of Venezuela’s national assembly and a former minister in Chavez’s government, said speculation about Chavez’s health worsening was wrong.

“Don’t pay attention to the rumors,” he said today on his Twitter account.

State oil company Petroleos de Venezuela SA’s bonds also rallied today on the reports. The yield on PDVSA’s 8.5 percent bonds due in 2017 fell 33 basis points to 12.20 percent, according to data compiled by Bloomberg. The bond’s price rose 1.21 cents to 85.09 cents on the dollar.

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