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2017-11-17 19:45:00

RUSSIA - VENEZUELA RESTRUCTURING $3 BLN

RUSSIA - VENEZUELA RESTRUCTURING $3 BLN

FTRussia has come to the aid of Venezuela with a deal to restructure $3.15bn of sovereign debt, allowing Caracas to meet obligations to other creditors and underlining Moscow’s role as the crisis-hit country’s main foreign backer.

Rating agencies this week declared Venezuela in default on several of its international bonds, worth more than $60bn in total. The country has said it will have to restructure the debt as part of what is set to be one of the largest sovereign defaults in history.

"Venezuela is advancing towards the recomposition of its external debt, to the benefit of its people," Simon Zerpa, Venezuela's economy minister, said from Moscow.

The intervention by Moscow allowed Venezuela to sidestep major western creditors, and analysts said the country was emerging as a "test case" for sovereign defaults, which are normally handled through a group of postwar institutions like the International Monetary Fund and the Paris Club.

Both Russia, which is a member of the Paris Club of international creditors, and China, which is not, are emerging as alternate venues for embattled countries seeking to avoid debt restructuring managed by traditional economic powers like the US and Western Europe.

"There is now the possibility of a lot of bilateral sovereign and quasi-sovereign [credit] exposure that is not being transparently reported", said Douglas Rediker, a former US representative on the IMF board. "No longer do you have the certainty that the Paris Club is going to reflect [the positions of] the vast majority of creditors".

Moscow has provided billions of dollars to Venezuela in recent years through sovereign debt purchases and cash advances to PDVSA, the state-owned oil company, from the Kremlin-controlled Rosneft.

Russia said on Wednesday it had agreed to restructure the $3.15bn of debt by allowing Venezuela to repay it over a 10-year period, with "minimal repayments" in the first six years, freeing up cash to meet other near-term debt payments.

"Debt relief provided to the republic [of Venezuela] as a result of this debt restructuring will allow it to allocate funds for the development of the country's economy, improve the debtor's solvency and increase the chances of all creditors to return loans previously granted," Russia's foreign ministry said in a statement.

Wilmar Castro Soteldo, Venezuela's agriculture minister, who flew to Moscow to sign the deal, said the agreement covers bilateral government obligations only and does not relate to money owed to Rosneft by PDVSA.

Mr Soteldo said the deal would facilitate increased trade ties with Russia, describing the agreement as a "financial and political decision of strategic importance".

Rosneft, which has loaned PDVSA about $6bn in payments guaranteed by oil supplies and a 49.9 per cent stake in Citgo, the Venezuelan oil company's US subsidiary, said on Tuesday that it had received "several hundred million dollars" in repayments that were being serviced on schedule. It added that it did not at present plan to provide the country with any more financial support.

Rosneft is in talks with PDVSA over exchanging the Citgo stake with other assets, such as oilfield rights, because of concern in the US about the prospect of the Russian company holding the stake.

On Monday, Caracas missed a deadline to pay $200m in interest on two of its government bonds, prompting S&P Global, the rating agency, to formally declare it in default.

The oil-rich nation, which was hit hard by the 2014 collapse in energy prices, is overdue on $420m of further interest payments on other sovereign bonds, as well as payments on debt issued by PDVSA.

Russ Dallen of Caracas Capital, a boutique investment bank that follows Venezuela, said there were signals that the government was shifting its stance on the possibility of defaults. Previously, it has insisted that all payments would be made. But at a press conference on Tuesday, Jorge Rodríguez, the new information minister, said Venezuela would continue to meet its debt obligations "but not by mistreating our people as in times past"

"They are planting the first seed," Mr Dallen said.

Although PDVSA was excluded from the agreement with Russia, its bonds have been trading at higher prices than similar bonds issued by the sovereign. PDVSA faces a much lighter repayment schedule this year and next, and is a vital source of earnings for Caracas.

"PDVSA is the moneymaker so Caracas will want to keep it safe," Mr Dallen said

Nicolás Maduro, Venezuela's president, announced two weeks ago that the country would have to "refinance and restructure" its foreign debts. But the first meeting with international investors offered few details on how the country would seek to tackle the crisis.

Socialist Venezuela is already under EU-imposed sanctions for human rights abuses, while some officials are under a number of US sanctions. Some countries have called for restrictions to be increased to include travel bans for some members of the administration and the freezing of assets, as well as an embargo on oil exports to the US.

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Earlier:

VENEZUELA'S SELECTIVE DEFAULT
2017, November, 14, 17:55:00

VENEZUELA'S SELECTIVE DEFAULT

REUTERS - Further complicating the situation, S&P Global Ratings declared Venezuela in selective default after it failed to make coupon payments on bonds due in 2019 and 2024 within a 30-day grace period. The agency warned there was a strong chance it would miss further payments within three months.

 
 VENEZUELA'S OIL PRODUCTION DOWN
2017, November, 13, 10:25:00

VENEZUELA'S OIL PRODUCTION DOWN

Output is expected to slump to 1.84 million barrels a day next year, the lowest compared with official government data since 1989.

 

 VERY IMPORTANT VENEZUELA
2017, November, 7, 12:15:00

VERY IMPORTANT VENEZUELA

The step to restructure debt comes as Venezuela stands to receive more revenue for its oil. The country’s crude oil basket price rose to CNY350.75 ($52.90) a barrel Friday, the highest since July 2015. And Venezuela did approve a $1.1 billion principal payment on a PDVSA bond on Thursday.

 

 RUSSIA - CHINA - VENEZUELA OIL
2017, September, 18, 12:30:00

RUSSIA - CHINA - VENEZUELA OIL

“The principal risk regarding Russian and Chinese activities in Venezuela in the near term is that they will exploit the unfolding crisis, including the effect of US sanctions, to deepen their control over Venezuela’s resources, and their [financial] leverage over the country as an anti-US political and military partner,” observed R. Evan Ellis, a senior associate in the Center for Strategic and International Studies’ Americas Program.

 

 VENEZUELA'S RESTRUCTURING
2017, September, 11, 12:25:00

VENEZUELA'S RESTRUCTURING

“There was a request from our colleagues in Venezuela to carry out a restructuring,” Russian finance minister Anton Siluanov said. “There are difficulties in fulfilling the debt.”

 

 U.S. - RUSSIA BLOCK IN VENEZUELA
2017, September, 4, 12:10:00

U.S. - RUSSIA BLOCK IN VENEZUELA

The Trump administration is ready to block a Russian state-owned oil giant from gaining control of critical energy assets in the U.S. owned by Venezuela, senior American officials say, a move that likely would feed tensions between Washington and Moscow.

 

 U.S. - VENEZUELA SANCTIONS
2017, August, 28, 19:35:00

U.S. - VENEZUELA SANCTIONS

U.S. - The Trump administration imposed new sanctions prohibiting trading new debt and equity issued by the Venezuelan government and state oil company PDVSA.

 

 

Tags: RUSSIA, VENEZUELA, OIL, ROSNEFT, PDVSA

Chronicle:

RUSSIA - VENEZUELA RESTRUCTURING $3 BLN
2017, December, 11, 09:55:00

SAUDIS OIL FOR JAPAN

REUTERS - State oil company Saudi Aramco last week raised prices for all crude oil grades to Asia in January.

RUSSIA - VENEZUELA RESTRUCTURING $3 BLN
2017, December, 11, 09:50:00

U.S. EMPLOYMENT UP BY 228,000

U.S. BLS - Total nonfarm payroll employment increased by 228,000 in November, and the unemployment rate was unchanged at 4.1 percent, the U.S. Bureau of Labor Statistics reported today. Employment continued to trend up in professional and business services, manufacturing, and health care.

RUSSIA - VENEZUELA RESTRUCTURING $3 BLN
2017, December, 11, 09:45:00

ДОХОДЫ РОССИИ: +204,8 МЛРД. РУБ.

Отклонение нефтегазовых доходов федерального бюджета от месячной оценки, соответствующей Федеральному закону о федеральном бюджете на 2017-2019 годы, в декабре 2017 года прогнозируется в размере +204,8 млрд руб.

RUSSIA - VENEZUELA RESTRUCTURING $3 BLN
2017, December, 11, 09:40:00

OPEC WILL BACK BY 2040

“Tight oil supplies are the wild card. They have reshaped the global outlook in recent years,” observed Ayed S. Al-Qahtani, who directs the research division at the OPEC Secretariat in Vienna. “US tight oil supplies will be the most important contributor but are expected to reach their peak around 2025.”

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