Venezuela's bonds tumble at lower levels than during oil strike

Amid the earthquake shaking world financial markets, the value of the Venezuelan bonds has fallen to historic lows, raising the cost of borrowing for the country and affecting the ability of the Ministry of Finance to act in order to contain the rise of the parallel US dollar. The USD Global 27 bond, the most representative of the basket of Venezuelan papers, has dropped 59.5 percent of its value, the lowest level in six years, including April 11, 2002, when despite the coup d'état the bond ended at 69.6 percent and the crisis triggered by the oil strike, when (January 16, 2003) the prices of the bond fell 60.7 percent. While the Venezuelan bonds have been hit by investors since the beginning of the year due to the persistent offer of papers and political tension, the decline of 21 basis points accumulated since September 26 has been mainly caused by the financial crisis in the United States. Miguel Octavio, an analyst at BBO Financial Services, a Venezuelan trading firm, considers that "there is a freezing of credit worldwide; nobody wants to invest, markets are panicking." Furthermore, brokers said that there are just a few buyers in the market while banks and investment funds with Venezuelan bonds in their portfolios are selling them for cash amid the credit crunch.