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PDVSA Leads Dollar-Bond Trading on Chavez Health Speculation

Venezuelan President Hugo Chavez
Venezuelan President Hugo Chavez salutes at the crowd from a balcony of Miraflores presidential palace in Caracas on April 13, 2012. Photographer: Leo Ramirez/AFP/Getty Images

April 23 (Bloomberg) -- Bonds from Petroleos de Venezuela SA, the state oil company, were the most traded corporate securities today as speculation mounted that President Hugo Chavez’s health is faltering amid a battle with cancer.

The notes are the most actively traded dollar-denominated corporate securities by dealers today, with 102 trades of $1 million or more as of 3:40 p.m. in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.

Chavez, 57, spoke on state television today for the first time since leaving for Cuba on April 13 to receive radiation therapy for an undisclosed form of cancer, saying that speculation about his health is likely to continue. Venezuelan government bonds have returned 20 percent this year, second among emerging-market economies after Ivory Coast, as investors speculate that there may be a change in government that would end policies that have led to inflation and nationalizations.

“Venezuela is holding up really well considering weak equities and a reversal of gains in Argentina,” said Siobhan Morden, head of Latin America strategy at Jefferies & Co.

Chavez’s 10-day absence from speaking on state television had been the longest since at least November. He spoke via telephone today with National Assembly President Diosdado Cabello.

The yield on the oil company’s benchmark 8.5 percent bonds due in 2017 fell 8 basis points, or 0.08 percentage point, to 11.76 percent today, according to data compiled by Bloomberg. The bond’s price rose 0.3 cent to 87.04 cents on the dollar.

Venezuela depends on oil sales for 95 percent of export revenue and about 45 percent of government spending. PDVSA, as the oil company is known, said that revenue rose to $124 billion in 2011.

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

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