Economy
The board of directors of state-run oil company Petróleos de Venezuela (Pdvsa) has been under pressure as petrodollars continue to decline and financiers in the international markets refuse to fund companies in emerging countries. Therefore, the conglomerate has decided to include Venezuelan banks among its financing options.

Top executives of Venezuelan financial institutions have said that Pdvsa owes at least USD 3 billion to service providers working in Venezuela. In parallel, such Pdvsa's creditors are beginning to default, with banks no longer granting loans, thus forcing contractors to defer projects.

Four weeks ago, the board of directors of Pdvsa and a group of banks discussed a payment schedule, under which the financial institutions would pay Pdvsa's outstanding bills to suppliers and, in return, they would be given bond with a clause providing for compensation in the event of losses related to devaluation.

Another option Pdvsa has pondered for the last month is a syndicated loan, that is, a type of loan where a group of four banks join together to lend the money. However, the talks have failed to move forward.

According to financial sources, another option that has been weighted is the possibility to repay service suppliers in dollars but with a discount. Contractors may sell the dollars on the swap market at a higher rate than the official exchange rate.

Bonds issue
Having discussed all the options, the board of directors of Pdvsa decided to sell US dollar-denominated bonds, which have be approved by the Ministry of Finance.

Ana Consuelo Barrios, Public Credit Director, Ministry of Finance, said that "Pdvsa has submitted the request (for the bond issue) and we are assessing it."

She added that financial officials are examining the different types of bonds to choose the more appropriate option.

While one of the choices is to sell the bonds only to the 5,000 contractors that are creditors of Pdvsa, financial authorities hinted that the issuance would have such a limitation.

The decline of revenues has forced Pdvsa President Rafael Ramírez ask providers to cut their rates by 40 percent. His call came during a live videoconference with the workers of the state-run oil company. According to Ramírez, the service suppliers that do not reduce their rates will not be paid.

Depreciated bonds
There is great expectation in the market about the possibility that Pdvsa, just like in previous occasions, issues US dollar-denominated bonds that could be bought in Venezuelan bolivars.

The major appeal of the issuance is the fact that the holders may resell the bonds in the international markets and get foreign exchange at a time when the US dollars have become scarce.

However, this scheme of payment holds some pitfalls. Pdvsa bonds have plunged and currently they are quoted at 38.6 percent of their value, in the case of bonds due in 2027.

Analysts believe that although Pdvsa's debt-assets ratio is not burdensome and Venezuela has enough resources to guarantee the payment of bonds, the collapse of oil prices and the firm's failure to pay suppliers, have a negative impact on the price of the bonds.

Translated by Gerardo Cárdenas

Víctor Salmerón / Mayela Armas H. / Deisy Buitrago
EL UNIVERSAL