Saturday, 20 October 2018

PDVSA bonds rally on coupon payment talk

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  • Workers stand in front of a drilling rig at an oil well operated by PDVSA

PDVSA bonds rallied on Tuesday on talk that the Venezuelan oil company had made good on overdue coupon payments, easing default fears ahead of big principal payments due this week and next.

PDVSA’s 2020s and 2021s were up between three and four points to trade at 85.00-86.00 and 41.50-42.50, according to one broker.

“Some accounts are saying they got paid,” the broker told IFR. “We couldn’t confirm it, but the market believes it is the case.”

Buyside accounts holding the PDVSA 2027s and 2037s have been waiting for a combined US$122m in coupon payments due October 12.

One investor told IFR that payment on the 2037s had been seen on Clearstream.

Earlier in the day, research firm Econalitica, founded by former Barclays economist Alejandro Grisanti, tweeted that PDVSA had paid interest on its 2027s and 2037s.

The news eased fears that PDVSA could potentially miss a US$841.9m principal payment on its 2020s that is due on Friday and thus slide into default.

Unlike coupon payments, which have a 30-day grace period, principal must be paid on time to avoid an event of default.

Econalitica tweeted that payment on the 2020s had already been approved and should become effective by Friday.

“It seems they got money in their accounts,” said Siobhan Morden, head of Latin America fixed-income strategy at Nomura.

“If they hadn’t, we wouldn’t be rallying. This suggests the default risks are lower for Friday.”

PDVSA also faces a US$1.12bn maturity on the November 2 2017s.

The sovereign owes about US$437m in coupon payments on its 2019s, 2024s, 2025s and 2026s that were due between October 13 and 21.


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