Venezuela's Currency Gains for Third Day on Petroleos Bond Sale
- From: periodistalibre@xxxxxxx
- Date: 27 Mar 2007 08:20:09 -0700
By Guillermo Parra-Bernal
Bloomberg
March 26, 2007
http://www.bloomberg.com/apps/news?pid=20601086&sid=adNFJ0p8ZMCg&refer=latin
_america
March 26 (Bloomberg) -- Venezuela's currency gained in unregulated,
parallel-market trading as the $5 billion dollar- denominated bond
sale
today by state oil company Petroleos de Venezuela SA may help meet
demand
for dollar-denominated assets.
Petroleos said in a statement that its bonds were priced at 105.5
cents, or
$1.05, each. The offering from the Caracas-based company may include
$2
billion of 10-year dollar notes with a coupon interest rate of 5.25
percent,
$2 billion of 20-year notes with a 5.375 percent coupon and $1 billion
of
notes maturing in 2037 and bearing a coupon of 5.5 percent.
``This issuance may temporarily contain the parallel exchange-rate
depreciation and price pressures, by supplying much needed foreign
exchange
to the market,'' Tania Reif, an analyst with Citigroup Inc. in New
York,
wrote in a report.
The bolivar jumped about 7 percent to 3,640 bolivars per dollar in the
parallel market, the highest since Jan. 8, traders said. On March 23
the
bolivar gained 5 percent.
The government keeps the currency at an official exchange rate of
2,150 per
dollar, 41 percent stronger than the parallel market rate. The bolivar
gained 1.3 percent last week, its first weekly increase in three
weeks.
The Petroleos bonds will pay interest and principal in dollars. Local
investors may be allowed to purchase the securities with bolivars. ABN
Amro
Bank NV and Econoinvest Casa de Bolsa CA are managing the sale, which
closes
March 29.
Inflation Hedge
Venezuelans often buy dollars or foreign currency denominated assets
to
protect savings against inflation or bend currency trading
restrictions that
President Hugo Chavez imposed in 2003. Annual inflation quickened to
20
percent in February, the fastest pace in more than two years.
``The rally in the currency should perhaps stop right here at where
the
bolivar is today,'' said Osvaldo Rangel, a trader with Global Capital
Valores in Caracas. ``So far, there's interest from the public on the
issue.
But it's up to investors to decide whether the price and the coupons
are
good enough.''
The prospect of a shortage of U.S. dollars, and concern over Chavez's
nationalizations of phone and energy companies boosted purchases of
foreign
exchange, making the bolivar the world's worst-performing currency
this year
while also fanning inflation.
The currency has shed 7 percent this year. In a bid to curb the
growing
importance of the parallel dollar market, government officials said in
January that people who buy and sell dollars in unregulated markets,
or
means outside the legal, government channel, may be subject to
prosecution.
Secondary Market
The 2017 bond may change hands at about 80 percent of face value once
it
begins trading by the end of this week or the start of next, according
to a
report by Caracas-based banking research company Aristimuno Herrera &
Asociados.
Investors may also try to sell the bond in the secondary market in
coming
weeks and try to take the proceeds out of the country, the company
said. The
government expects as many as 200,000 individual investors to
participate in
the transaction.
Stocks and government bonds fell as banks, which can only hold a
portion of
their capital in foreign currency-denominated assets, sold other
dollar-linked notes to raise cash to buy Petroleos bonds.
The yield on the 5.25 percent dollar-linked bond, known as TICC,
climbed 8
basis points, or 0.08 percentage point, to 4.73 percent, according to
Banco
Santander Central Hispano SA's brokerage. The price, which moves
inversely
to the yield, fell 0.8 bolivar to 104.75 bolivar.
The TICC bonds now yield 2 basis points more than the U.S. Treasury
maturing
in February 2019. On March 23, the bond yielded 6 basis points less
than the
2019 Treasury.
The Caracas Stock Exchange Index fell for a second day, dropping 0.6
percent
to 47,654.1
.
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