Caracas, October 26, 2016 (venezuelanalysis.com) – Venezuelan state oil company PDVSA announced Monday that creditors had accepted a proposal to exchange US$2.8 billion in bonds maturing in 2017 for $3.4 billion due in 2020.
In late September, the state oil giant presented creditors with a modified offer to exchange $5.325 billion in bonds due in 2017 for securities payable at 1.22 times the principal in 2020.
With the deadline for the deal fast approaching and less than half of bondholders on board, PDVSA extended the cutoff three times and threatened to default if a majority did not accept the deal.
By the final deadline Monday, 52.57 percent of creditors agreed to the offer, amounting to a successful swap of 45.3 percent of bonds due in April and November 2017 equal to $2.8 billion.
Venezuelan Oil Minister and PDVSA President Eulogio Del Pino hailed the deal a “victory over the onslaught of internal and external elements that wagered on a negative result for the company and the country”.
“In spite of the aggressions that our company was submitted to during the process, which are incomparable to any other bond swap operation ever done in the world, we have reached 52.57% of the maximum amount of the swap…which constitutes a $2.8 billion refinancing of the firm,” he concluded.
In recent months, the Venezuelan government has repeatedly denounced what it has termed a “financial blockade” by international banks and rating agencies, which it says refuse to renegotiate the terms of debt payments and exaggerate risk ratings despite the country’s pristine payment record.
In August, Citibank unexpectedly resigned as pay agent for PDVSA’s bonds in an unusual move that analysts have attributed to the possible influence of the United States government.
While PDVSA successfully averted default with the swap deal, the company still has major payments due this year.
By the close of October, the state firm must pay $1 billion in bond payments as well as an additional $600 million to the Canadian mining company Gold Reserve, Inc. as part of a negotiated indemnity for expropriated assets.
While Venezuela’s foreign reserves have fallen to a new low of $11.8 billion, rising oil prices could yield the government an additional $2.5 billion in revenue this year, reports Financial Times.