Just a month after dodging a default bullet thanks to a last-minute bond swap, Venezuela's state-owned oil company PDVSA missed coupon payments due on its bonds, according to JPMorgan. However, PDVSA president Del Pino raged on Twitter that "the information about a PDVSA default spread by the enemies of the fatherland is totally false," but the bonds saw prices tumble despite his statement.
PDVSA in October swapped $2.8 billion in bonds due in 2017 for new bonds maturing in 2020... but that bounce is now dead...
As Bloomberg reports, PDVSA has activated a 30-day grace period after not meeting the full coupon payments on its 2021, 2024 and 2035 bonds that were due last week. About $400 million was due on those bonds, while PDVSA did pay $135 million due on its 2026 debt last week, JPMorgan’s Javier Zorrilla writes, citing information from the paying agent on the bonds.
“We still believe PDVSA will make these payments during the grace period,” Zorrilla wrote in the report.
“However, this highlights the cash difficulties and mismanagement of PDVSA with regards to its liabilities.”
But, as Reuters reports, PDVSA, in a statement, said it had paid "punctually" its obligations due this month for 2021, 2024 and 2026 papers, and was also "in the process of executing" interest payments for the 2035 bond.
"In this way, PDVSA honors its commitment ... ratifying the financial solidity of Venezuelans' main industry," it said.
Prior to PDVSA's response, Reuters reports that Torino Capital had said the reported delay appeared to be "a technical mistake" rather than an indication of default.
It noted that payments were being made "through accounts not conventionally used for these purposes" and that some PDVSA management changes had occurred, both of which could have contributed to a delay.
"Our tentative conclusion is thus that the delay in payments likely reflects administrative and technical issues of the type that the 30-day grace period is designed to handle," wrote its chief economist Francisco Rodriguez in a note to clients.
"We do not believe it reflects a change in authorities' willingness to service its international obligations."
Venezuela bonds trade at distressed levels as a result of investor concern that a steep recession and spiraling inflation will leave it without resources to meet heavy commitments.
The country's sovereign bonds on average pay 26 percentage points more than comparable U.S. Treasury Notes, according to JPMorgan's Global Diversified Emerging Markets Bond Index.
But there is always a dip-buyer ready to scoop up collapsing bonds...
“I hope it gets cheaper so I can buy more,” said Diego Ferro, co-chief investment officer of Greylock Capital Management LLC in New York. “It’s a non-event most likely.”
Well the 2037s jut got a lot cheaper Mr. Ferro...
And all this on the day when the Bolivar crashed through 2000/$ on the black market for the first time...