Venezuela's ad-hoc PDVSA board begins payment on Citgo-backed 2020 bond

CARACAS (Reuters) - Venezuela’s ad-hoc board of directors for state oil company PDVSA, appointed by opposition leader Juan Guaido, said on Thursday it has made an interest payment on its bond maturing in 2020, delaying uncertainty over its crown jewel U.S. asset.

The corporate logo of state oil company PDVSA is seen on a tank at an oil facility in Lagunillas, Venezuela January 29, 2019. REUTERS/Isaac Urrutia

The PDVSA bond is backed by shares in U.S. refiner Citgo and failure to make the $71 million interest payment would have allowed bondholders to seize the shares as compensation.

But Citgo may still be at risk of seizure because the company has a $913 million interest payment due on Oct. 27. Other creditors of Venezuela, including Canadian mining company Crystallex, are also attempting to seize Citgo in order to collect on unpaid debts.

President Nicolas Maduro’s government had remained current on the 2020 bond even as it fell behind on more than $10 billion in interest and principal payments on other bonds issued by PDVSA and the government.

But efforts by any Maduro-linked entity to pay would have been complicated by sanctions imposed by the United States on PDVSA in January as part of a bid to pressure Maduro to step down.

The United States and dozens of other countries have recognized Guaido, who in January invoked Venezuela’s constitution to assume an interim presidency, claiming Maduro’s 2018 re-election was illegitimate.

“We see the USD 913 million October payment as unlikely in the absence of political change,” New York-based Torino Economics said in a note this week.

Maduro retains control of PDVSA’s operations in Venezuela as well as state functions, but a Guaido-appointed board has taken control of Houston-based Citgo.

PDVSA’s ad-hoc board has said it will use uncollected oil revenue from PDVSA to make the bond payment but has not provided further specifics about the source of the funds.

Neither PDVSA nor Venezuela’s oil ministry immediately responded to requests for comment on Thursday. Maduro has frequently accused the opposition of trying to “steal” Citgo.

The opposition-controlled National Assembly, led by Guaido, voted to make the payment last week. Guaido’s allies have said the payment will allow his team to protect the Venezuelan state’s assets abroad and leave it in a better position for an eventual debt renegotiation.

Reporting by Corina Pons and Mayela Armas; Writing by Luc Cohen; Editing by Daniel Flynn and David Gregorio