Venezuela Dollar Bonds Gain on Renewed Debt Buyback Speculation

Venezuelan bonds rose, with yields relative to Treasuries narrowing the most in two weeks, on speculation the government will buy back debt. The extra yield investors demand to own developing-nation debt rather than U.S. Treasuries shrank 18 basis points, the most since June 10, to 5.98 percentage points at 3:18 a.m. New York time, according to JPMorgan Chase & Co.'s EMBI Plus index. One basis point equals 0.01 percentage point. The so-called spread swelled 48 basis points last week. Venezuela is ``studying'' plans to buy back some of its international bonds, Finance Minister Ali Rodriguez told reporters in Caracas on June 27. Speculation the government would go through with the buyback had faded in recent days. A government official familiar with the plans said in late May that Venezuela may buy back debt in a series of private purchases. ``Maybe people were giving up on buyback,'' said Igor Arsenin, an emerging-market fixed-income strategist at Credit Suisse Group in New York. ``Now they have some indication that they might do it.''