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Crude Crash Slams Venezuelan Bonds To Close At 5-Year Lows: 21% Yield

Tyler Durden's picture




 

It is no wonder Venezuela is suffering... Venezuelan bond prices have collapsed around 51 - the lowest close in at least 5 years as yields surge to around 21% yield. The market is pricing in extremely high probability of default (around 63% over 2Y, and 80% based on 5Y CDS) which, as Bloomberg reports, is surging as "every $1 drop in oil is around $770 million of lost revenue, so their ability to pay has taken a big hit."

 

 

As Bloomberg reports,

Venezuelan bonds fell to a five-year low as traders projected higher chances of default after OPEC’s decision to maintain oil output pushed crude lower.

 

...

 

“Every $1 drop in oil is around $770 million of lost revenue, so their ability to pay has taken a big hit,” Kevin Daly, a money manager at Aberdeen Asset Management, said in an e-mailed response to questions. “The market is already pricing in a high probability of default next year.”

 

Bank of America Corp. lowered its recommendation on Venezuelan bonds today to marketweight from overweight, citing the OPEC decision. At current oil prices, Venezuela will need an additional $25.6 billion to finance imports, the bank said.

 

...

 

“The Venezuelan government has not been very responsive, not acting fast enough to adjust, and not calming the markets with executable plans to respond to these external pressures.”

 

Venezuela can overcome any situation arising from lower oil prices and is taking measures to protect itself amid the drop, Rafael Ramirez, the nation’s foreign minister, said in an interview published in the newspaper Panorama.

 

Venezuela needs a break-even price near $85 a barrel with adjustments to pay for its dollar liabilities, Jefferies Group LLC analyst Siobhan Morden said in a research note.

*  *  * 

As long as Maduro can keep paying the military, buying their apartments and cars, all will be well... if not - coup time and social unrest.

 

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Mon, 12/01/2014 - 16:22 | 5505776 SAT 800
SAT 800's picture

Wow ! I want to buy some of those right away ! 21%, wow. What a good deal ! Where can I get some of these ?

Mon, 12/01/2014 - 16:24 | 5505789 prudent1nvestor
prudent1nvestor's picture

such interest rate. many coupon. wow

Mon, 12/01/2014 - 16:26 | 5505802 kaiserhoff
kaiserhoff's picture

And yet their domestic gasoline price is 5 cents per gallon.

Isn't Soviet Central Planning Great?

Mon, 12/01/2014 - 16:42 | 5505860 malek
malek's picture

And even better, if they would raise the domestic gasoline price it wouldn't make much of a difference as the state pays for almost everyone anyway, through wages in state companies or support payments!

Mon, 12/01/2014 - 17:14 | 5505991 smlbizman
smlbizman's picture

looks like we are going to have to re-coup some folks, again....

Mon, 12/01/2014 - 16:54 | 5505904 silverer
silverer's picture

Socialism is working brilliantly. Now, while clicking your heels together...and repeating "There's no system like socialism, there's no system like socialism..."

Mon, 12/01/2014 - 16:23 | 5505783 SmokinMonkey
SmokinMonkey's picture

Well the poor people better not shit themselves..cause ah ..there is no toilet paper

Mon, 12/01/2014 - 16:27 | 5505807 kaiserhoff
kaiserhoff's picture

Ah, there's lots of poison ivy leaves...,

  oh wait.

Mon, 12/01/2014 - 16:29 | 5505818 Pool Shark
Pool Shark's picture

 

 

"Well the poor people better not shit themselves..cause ah ..there is no toilet paper."

 

Sure there is; just use their government bonds...

 

Mon, 12/01/2014 - 16:52 | 5505888 silverer
silverer's picture

Things get even better when they figure out how to split bonds five for one.

Mon, 12/01/2014 - 18:38 | 5506260 COSMOS
COSMOS's picture

If they have no food they wont shit, voila.

Mon, 12/01/2014 - 16:28 | 5505814 youngman
youngman's picture

I love the lies that come out of that country.....they are sucking wind there...its all falling apart...rumor has it they are selling the USA gas stations...to be announced soon....and some paramilitaries from Colombia just attacked some mitary outpost in Venzuela....not good....their army has been crossing over into Colombia the last two weeks for something....TP probably...lol...something is up

Mon, 12/01/2014 - 16:54 | 5505905 DoChenRollingBearing
DoChenRollingBearing's picture

 

 

+ 1

This is another great opportunity for South Amercian countries to observe and then see what Socialism does to a country.

Mon, 12/01/2014 - 18:38 | 5506267 COSMOS
COSMOS's picture

Things wouldnt be so bad if the USA wasnt gunning for them.  We would still have the USSR around if the price of oil was not manipulated down back then.

Mon, 12/01/2014 - 20:30 | 5506637 tarabel
tarabel's picture

 

 

You say that like its a bad thing rather than a good thng.

Mon, 12/01/2014 - 18:07 | 5506181 negative rates
negative rates's picture

Sounds like they need an enima and quick.

Mon, 12/01/2014 - 20:44 | 5506686 The Shape
The Shape's picture

They're still nothing compared to the lies coming out of the USA.

Mon, 12/01/2014 - 16:32 | 5505833 NEOSERF
NEOSERF's picture

So given that the "tide is receding" in Venezueal and Argentina, who exactly is most exposed with their trunks down?

Mon, 12/01/2014 - 16:36 | 5505845 wstrub
wstrub's picture

They have gold.......

Mon, 12/01/2014 - 18:49 | 5506303 Veneco
Veneco's picture

Hopefully they do if the crooks in governmet had not stolen it

Mon, 12/01/2014 - 16:38 | 5505850 Smegley Wanxalot
Smegley Wanxalot's picture

Venezuelan bonds are used as toilet paper on the streets of Caracas, anyway.

Mon, 12/01/2014 - 16:49 | 5505881 silverer
silverer's picture

If we swapped Washington pols with Argentina's Kirchner, we'd be about the same?

Mon, 12/01/2014 - 16:53 | 5505900 pebblewriter
pebblewriter's picture

FWIW, should see a nice rebound in oil (CL) prices off today's lows, but unclear just how much and whether it will stick.  Best estimates are $74 and, after that, $84.

http://pebblewriter.com/update-on-oil-dec-1-2014/

 

Mon, 12/01/2014 - 21:59 | 5507000 Clowns on Acid
Clowns on Acid's picture

What..? Are you tellin us you know something? Nice tight price range there with a aer tight timeline..... feckin' doofus.

Mon, 12/01/2014 - 16:57 | 5505917 villainvomit
villainvomit's picture

Yeah Vinnie 12.75 of 22 + 2200 and PDVSA 5.s of 2015 are plus 3000 :EEEEEEEK:

Uhm no thanks !

Mon, 12/01/2014 - 17:02 | 5505921 Paracelsus
Paracelsus's picture

Someone said Caracas is a very dangerous town. I don't see the problem. Venezuela has tons of Nat Gas.

Looks like they are being kicked to the curb."This is what happens when you get uppity".Iraq,Libya,Panama,etc.

 

But lordy,those Venezuelan women......

Give a dead man a spasm...

Mon, 12/01/2014 - 17:02 | 5505934 silverer
silverer's picture

Actually, the plan, after starting nuclear war with Russia over the Ukraine, and somehow coming out unscathed, is to continue to bribe the Saudis to bankrupt Venezuela with low oil prices, so our elite banksters can move in and take over Venezuela as well.

Mon, 12/01/2014 - 17:19 | 5506004 Make_Mine_A_Double
Make_Mine_A_Double's picture

I'm sure somewhere in the fine print on those 5 or so billion in 'loans' from the very nice Chinese people there may be verbiage about being a Chicom satillite in lieu of not paying the vig.

Mon, 12/01/2014 - 17:23 | 5506031 db51
db51's picture

Fucking-A.   We'll be seeing Venezuelan Women Dating Ads soon on ZH.   

Mon, 12/01/2014 - 17:39 | 5506097 Uncle Sugar
Uncle Sugar's picture

AT 53 rbl/USD I want to see more Russian ads

Mon, 12/01/2014 - 17:23 | 5506032 ncdirtdigger
ncdirtdigger's picture

They should join the Euro and have the ECB backstop them ala Greece

Mon, 12/01/2014 - 18:06 | 5506177 Joebloinvestor
Joebloinvestor's picture

Too bad Hugo is dead.

It would be nice to fuck with him.

Mon, 12/01/2014 - 21:23 | 5506839 Parafuso
Parafuso's picture

Moar Utopia!

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