Friday, November 21, 2008

Venezuela buys back over $800 million bonds

Venezuela has recently bought back more than $800 million of foreign debt, including Global 2027s and other bonds, and is mulling more buyback operations, the OPEC nation's economy minister said on Friday.

As Venezuela's bond prices fell in recent weeks because of a plunge in the price of oil, its main income, the socialist government of President Hugo Chavez said it could take advantage of the cheaper costs and buy back debt. "It's been done," Economy Minister Ali Rodriguez told reporters. "It was for more than $800 million and we are looking at new purchases, although we will announce that at the appropriate moment."

Earlier in the year, government officials had said the plan was to buy back about $1.5 billion in debt.
In recent days, Venezuelan bond prices have been erratic, raising speculation the South American country could be buying back some debt.

On Thursday, Venezuela's benchmark global bond due 2027 fell 3.063 points to bid 64.00.
The buyback took place amid uncertainty for credits in the region with Venezuelan ally, Ecuador, threatening to default on foreign debt it believes was contracted illegally years ago.
Venezuela is believed to be a holder of Ecuadorean-linked debt, whose value has fallen due to the threats.

Rodriguez said Venezuela would respect whatever decision Ecuador took over its debt but it would discuss the situation with the government of President Rafael Correa if it was going to affect Venezuela.
Venezuela is typically considered one of Latin America's riskiest credits despite its oil income as one of the biggest oil suppliers to the United States.

While Chavez has consistently made debt payments, his anti-capitalist rhetoric worries some investors, who fear that he could one day decide to default.

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