CARACAS (Reuters) - Venezuela’s central bank is negotiating about $500 million in financing with a New York-based investment fund by using PDVSA bonds as collateral to help meet almost $3 billion in debt payments coming due in April, a lawmaker said on Monday.
The bank began talks with U.S. investment fund Fintech Advisory Inc three weeks ago to obtain some of the cash needed to pay external debt this month, opposition lawmaker Rafael Guzman, who sits on the congressional finance commission, told journalists.
“These are desperate measures because (Venezuela) in April has to fulfill its obligations and apparently does not have the resources,” said Guzman.
“They intend to do an operation; we do not know if it is via repo or a direct leverage with PDVSA bonds.,” said Guzman.
Neither the central bank or Fintech Advisory responded to a request for comment.
Separately, Venezuela is negotiating to receive financial support from Russian state oil company Rosneft to comply with the heavy commitments of cash-strapped state oil company PDVSA in April, traders and a government source told Reuters last week.
Venezuela’s oil-dependent economy is suffering a brutal economic recession that has millions of people skipping meals amid steep inflation and low salaries.
President Nicolas Maduro and government officials have reiterated in recent weeks that they will continue to comply with debt payments.
“The government has always done everything possible to pay its debt, and I still see the president’s political will to pay,” a source close to the government said on Monday.
Lawmaker Guzman said that the central bank will negotiate to use about $1.5 billion in PDVSA bonds as collateral, which it has in its portfolio, to get the cash.
Another option that Guzman said the government is evaluating is to offer dollar-denominated bonds to local banks in exchange for their foreign currency positions
In early 2017, Venezuela was evaluating a repurchase agreement with investment bank Nomura [NMHLDC.UL], which also would have entailed offering PDVSA bonds as collateral in order to obtain liquidity, Reuters reported.
Guzman said the operation with Nomura was suspended a few days ago, amid last week’s scandal in which the Supreme Court assumed the powers of the Congress, a decision later reversed.
“Nomura understood and preferred not to get involved,” Guzman said.
Opposition lawmakers said the central bank cannot carry out that type of debt operation and the Ministry of Finance cannot carry out any issuance or loan without Congress’ authorization, a stance the government rejects.
“Any central bank can do repo operations, debt operations, without requiring authorization from anyone, because it manages its investment portfolio as per the expectations of the market,” said a source close to government.
Writing by Girish Gupta; editing by Diane Craft
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