Corina Pons, Brian Ellsworth
CARACAS (Reuters) – Holders of one of Venezuelan state oil company PDVSA’s distressed bonds will by Thursday receive an amortization payment that was due last week, according to a message from U.S. trust company DTC seen by five market sources on Tuesday.
The news confirmed that the crisis-stricken nation is continuing to prioritize debt service payments despite an unraveling socialist economy that is suffering triple-digit inflation and Soviet-style product shortages.
And it boded well for the $1.2 billion interest and principal payment on PDVSA’s 2017N bond that matures on Thursday but signaled that unexplained delays are likely to persist.
“DTC transferred to Euroclear at 3 p.m. … Clients will see it in their accounts on Thurs morning,” said a message sent by DTC, according to market sources. DTC is officially called Depository Trust Company, and the message referred to settlement agent Euroclear.
Both DTC and Euroclear declined to comment.
Bondholders had since Friday been unable to figure out where the $842 million amortization payment on the PDVSA 2020 bond had ended up. PDVSA on Friday said it had transferred the funds, but the money had not appeared investors’ accounts.
Many had described confusion over which financial institutions were in charge of transferring the funds to bondholders. Silence from PDVSA and the officially designated intermediaries fueled market nervousness.
PDVSA did not immediately respond to an email seeking comment.
The company’s bonds were little changed on the news, having slipped slightly on Tuesday as the market largely shrugged off concerns about the delay, according to Thomson Reuters data.
PDVSA’s 2017N bond VE055409692= maturing on Thursday was down 0.125 percentage points to a bid price of 95.375, while PDVSA’s 2022 bond VE059352415= was down 0.740 percentage points to bid 45.510.
President Nicolas Maduro says the country is the victim of an “economic war” led by his political adversaries and exacerbated by recent economic sanctions by the government of U.S. President Donald Trump.
His critics insist that years of squandering oil revenue and dysfunctional price and currency controls have steadily unwound the economy, leaving millions unable to eat properly.
Maduro insists that the government will honor all of its debt commitments and describes default talk as a smear campaign against the ruling socialists.
Since early October PDVSA and Venezuela have been delaying the payment of bond coupons, using a 30-day grace period to push payments down the road. They now have close to $750 million in unpaid coupons that come due within the next month.
Separately, Venezuela made a late payment of $74 million to holders of securities called Oil-Indexed Payment Obligations, which were originally issued in 1990, Bank of New York Mellon said in a newspaper advertisement on Tuesday.