(Corrects SEC regulation designation to 144a from 14a, paragraph 3)
By Brian Ellsworth
CARACAS, May 14 (Reuters) - 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 144a 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 1.63 percent.
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 Andrew Hay)