February 6, 2020 / 12:33 AM / 14 days ago

Venezuela's Maduro lets companies issue securities in hard currency

FILE PHOTO - Venezuela's President Nicolas Maduro takes part in a rally during the commemoration of Hugo Chavez's coup attempt in Caracas, Venezuela February 4, 2020. Miraflores Palace/Handout via REUTERS

CARACAS (Reuters) - Venezuelan President Nicolas Maduro on Wednesday authorized local companies to issue securities in hard currency, amid a broad liberalization of an economy that was for years hemmed in by stringent socialist controls.

The change comes on the heels of a share offering by rum distiller Ron Santa Teresa that was meant to take advantage of Maduro’s unexpected liberalization of the economy last year.

“The other important thing that has been proposed is legal authorization for companies to issue securities in foreign currency ... approved!” said Maduro during a televised broadcast.

Executives from Santa Teresa RST.CR and real estate developer Fondo de Valores Inmobiliarios FVIb.CR (FIV) said last month they believed Venezuela was headed toward an economic transition similar to China and the Soviet Union.

The company’s leaders had said they were seeking permission to issue shares in dollars.

They form part of a group called “Optimists Anonymous” made up of executives and investors who think businesses will become profitable under Maduro’s new approach to the economy.

Last year, the government unexpectedly relaxed 15 years of stringent economic regulations, abandoning enforcement of price controls and allowing dollar transactions in the face of runaway inflation and U.S. sanctions.

In response, at least half a dozen Venezuelan banks have begun storing in vaults millions of dollars and euros accumulated in cash by businesses, according to sources.

Reporting by Brian Ellsworth; Editing by Richard Chang

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