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Wednesday, 13 December 2017

Venezuela bonds lower on US sanctions fears

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Venezuelan bonds fell on Monday following a controversial election at the weekend that could trigger new sanctions from the United States.

Investors had expected the election to proceed, even though much of the international community decried the vote as a power grab by President Nicolas Maduro.

But the prospect that the US could announce sanctions on the South American country’s oil sector still had investors on edge on Monday.

Bonds issued by the sovereign and by state-owned oil company PDVSA opened lower in New York trading amid thin volumes, according to Ignacio Davila, assistant vice president at brokerage Torino Capital.

“There hasn’t been much trading going on,” Davila told IFR. “People are waiting to see what sanctions the US will impose.”

Some of the bonds that still trade at high dollar prices - such as the PDVSA 2020s - were among the hardest hit, slipping between half and three quarters of a point to a bid price of 66 cents on the dollar, said Davila.

The Trump administration is considering imposing US sanctions on Venezuela’s oil sector in response to Sunday’s vote, Reuters reported. 

 

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