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Venezuela: Sale of $5 billion in PDVSA bonds goes very well
Petroleumworld
CARACAS
Petroleumworld.com 03 28 07President Hugo Chávez announced last week the launch of $5 billion in PDVSA bonds. The state-owned oil company, PDVSA, started selling the bonds on Monday to the domestic market. The bond issues have been met with very strong demand and are in fact to soaking up excess cash in the economy.
"The bond is extremely solid because it is backed by of one of the most solid companies in the world, PDVSA," said Chávez last week, encouraging Venezuelans to invest. PDVSA will offer the bonds for 10, 20 and 30-year periods to all Venezuelan investors, but they will only be open for sale from Monday, March 26th to Thursday, March 29th.
"That's just four days for you to make your offer," said Chávez.The recently issued Bonds of the South were quickly bought up by investors and didn’t meet the high demand.
The oil company bonds, which are denominated in U.S.-dollars, are in high demand among Venezuelan businesses and individuals anxious to acquire the U.S. currency amid strict currency controls. Although the bonds must be bought in Bolivars, investors can resell the bonds in dollars and the interest is also paid in dollars, said Chris Carlson of Venezuelanalysis.com.
The upcoming bond issue has been met with speculation that PDVSA is facing a cash flow problem and is turning to financial markets in search of capital. PDVSA has taken out loans this year with the intention of investing in higher oil production. The country hopes to raise the level of production from 3.3 to 5.8 million barrels per day by 2012.
But according to analysts, the main purpose of the bonds is to promote long-term savings in the economy. By promoting long-term savings inside the Venezuelan economy the government hopes to protect the country from fluctuations in the world economy. It appears that the state-owned oil company is looking for internal investment instead of relying on international financing.
"These bonds are oriented toward small, medium, and big domestic investors," said the president last week.PDVSA President Rafael Ramirez, who announced the issue of the bonds Thursday night, reminded local media that PDVSA ranks as the third most important oil-sector firm in the world. "Our numbers are guaranteed by the financial results, which are excellent," asserted the minister.
The conditions for the bonds are Petroleumworld Venezuela .
Petroleumworld 27 03 07
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