En Español

Very usefull links


News links




Dow Jones

Oil price



Views and News





Venezuela/PDVSA debt deadlines: Will oil cover February?

A default is becoming hard to avoid. How long can Venezuela /PDVSA continue to finance via arrears before converting into fixed U.S.-dollar liabilities?

Petroleumworld.com 02 06 2017

The government of Venezuela and state-controlled oil company Petroleos de Venezuela together face $10 billion in debt payments this year, though April deadlines could prove especially onerous and February's burden is sizable.

The government is on the hook this year for $3.4 billion and Pdvsa, $6.6 billion — with $2.9 billion due mostly by Pdvsa in April, according to a Caracas Capital . It puts the total debt burden of Venezuela, an oil producer and OPEC member, at $71 billion, not including a number of special arrangements including loans from China to be paid back with oil shipments .

Nomura Securities debt strategist Siobhan Morden , wary after Venezuela's payment delay in November , is focused on Venezuela's February debt payment burden of $705 million. She expects the government to muddle through as oil prices rise. She warns that the government has not released balance of payment statistics since the third quarter of 2015, so estimates from pundits are just that:

” … We are now entering into a heavy coupon month with higher oil prices providing a buffer but still latent concerns after payment delays last November. … There is risk of underestimating U.S.-dollar liabilities on the growing arrears that eventually converts into fixed income liabilities and a higher service deficit including payment to oil suppliers (maturing promissory notes), payments to joint ventures and other incidental payments such as headlines on delays of oil shipments for arrears on tanker cleaning and inspection fees. How long can Venezuela/PdVSA continue to finance via arrears before converting into fixed U.S.-dollar liabilities? The newswire reports are also disconcerting on higher exports to China @ 555,000 barrels per day; however this may not challenge the assumption of a grace period of payments if [it is] cashed-in exports as opposed to payment in kind on loans …”

See our posts Venezuela & Oil Debt: “Default Probable,” Fitch Says and Gartman On Gold: Venezuela's A Seller . Also see Morden's analysis of assets that can be used for payments: Venezuela Debt Default? Nomura Counts The Cash .

Venezuela government bonds were among the holdings in the  iShares JPMorgan USD Emerging Markets Bond exchange-traded fund  ( EMB ), and Pdvsa bonds were among the holdings in the  VanEck Vectors Emerging Markets High Yield Bond ETF  ( HYEM ), as of Dec. 30, according to Morningstar. But there are no Venezuela equities in the iShares Latin America 40 ETF ( ILF ), which is moving higher today.

Story by Dimitra DeFotis from Barron's.

We invite all our readers to share with us
their views and comments about this article

Write to editor@petroleumworld.com

By using this link, you agree to allow PW
to publish your comments on our letters page.

Any question or suggestions,
please write to: editor@petroleumworld.com

Best Viewed with IE 5.01+ Windows NT 4.0, '95,
'98,ME,XP, Vista, Windows 7,8,10 +/ 800x600 pixels






Contact: editor@petroleumworld.com,

Editor & Publisher:P.Ohep F. /Producer - Publisher:P.Ohep F./
Contact Email: editor@petroleumworld.com

CopyRight © 1999-2016, Paul Ohep F. - All Rights Reserved. Legal Information

PW in Top 100 Energy Sites

CopyRight©1999-2016, Petroleumworld ™  / Elio Ohep Fitzgerald- All rights reservedThis site is a public free site and it contains copyrighted material the use of which has not always been specifically authorized by the copyright owner.We are making such material available in our efforts to advance understanding of business, environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have chosen to view the included information for research, information, and educational purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission fromPetroleumworld or the copyright owner of the material.