(Recasts with details, context on foreign exchange market and
By Brian Ellsworth
CARACAS May 14 Venezuela's state oil company
PDVSA announced on Wednesday a $5 billion bond issue maturing in
2022, 2023 and 2024 with a 6 percent coupon in a private
placement with state-run banks.
The issue may help boost availability of hard currency
needed to supply a new state-run foreign exchange platform
called Sicad 2, and could help pay government debts to industry
caused in part by 11-year-old currency controls.
The bond will not be registered with the U.S. Securities and
Exchange Commission and will only be available to "qualified
institutional investors" on the secondary market under
Regulation 14a of the Securities Exchange Act, PDVSA said.
The company's global bonds were down slightly on morning
trading, with the PDVSA 2027 leading the slump with a drop of
Venezuela's bond yields remain the highest among emerging
markets, with spreads over comparable U.S. Treasuries close to
1,060 basis points.
Those yields have been driven by concerns that problems with
the country's state-led socialist economic model could lead the
government to default on foreign obligations.
A lack of hard currency has led to shortages of basic
staples ranging from flour to toilet paper as businesses
struggle to import raw materials.
Venezuela this year created the new Sicad 2 currency
platform, which offers dollars at around 50 bolivars.
Two other official exchange mechanisms provide greenbacks at
6.3 and around 10, both of which function through 11-year-old
currency controls created by late socialist leader Hugo Chavez.
The black market rate for dollars is now close to 70.
PDVSA in November last year announced a $4.5 billion issue
of which $1.5 billion was sold to the central bank and the
remaining $3 billion offered to oil service providers to pay
down billions of dollars in accumulated debts.
The company over the last decade has functioned as the
financial engine of the late Chavez's self-styled revolution,
paying a large tax burden in addition to investing heavily in
social development programs.
The current issue will take PDVSA's total bond sales since
2007 to about $37 billion.
"The market has been absorbing all of this debt and it looks
like there's still a lot of demand, I've been receiving calls
from international investors," said Russ Dallen, managing
partner of Caracas Capital Markets.
(Writing by Brian Ellsworth; Editing by Andrew Cawthorne and