Wall Street Journal: Venezuela Tries to Resell $5 Billion Bond at Deep Discount

“It’s like they’re having a going-out-of-business sale,” said Russ Dallen, partner at the brokerage Caracas Capital Markets. “And that’s what buyers should be worried about. Either they’re really desperate or they’re just filling up their credit card with no plans of paying back.”

https://www.wsj.com/articles/venezuela-ties-to-resell-5-billion-bond-at-deep-discount-1496708928

http://www.foxbusiness.com/features/2017/06/05/venezuela-ties-to-resell-5-billion-bond-at-deep-discount.html

El Nuevo Herald: Citgo podría pasar a manos de petrolera rusa tras desesperado acuerdo de Maduro

citgotx“El capital accionario de Citgo está ahora totalmente comprometido y la empresa está hipotecada hasta lo máximo”, dijo Russell M Dallen, Gerente Socio de la firma Caracas Capital.

El régimen de Nicolás Maduro, que enfrenta un creciente descontento ante la aguda escasez de alimentos y medicinas en el país, no ha dado a conocer el monto del préstamo que obtuvo Rosneft, empresa que pertenece en un 50 por ciento al Estado ruso.

Pero Dallen estima que podría haber sumado alrededor de los $1,500 millones.

Rosneft, empresa que se ha visto obligada a maniobrar con cuidado en el marco de las sanciones impuestas contra Moscú, ha estado realizando una serie de operaciones estratégicas para expandir sus operaciones, incluyendo la compra de la segunda mayor refinería en India e inversiones realizadas en campos petroleros de Egipto.

La empresa también participa en cinco proyectos en Venezuela, en lo que es visto como un proceso emprendido por el gobierno de Moscú para hacer uso de la industria petrolera rusa como instrumento de influencia geopolítica, comentó Dallen.

La adquisición de Citgo, empresa que tiene tres refinerías y tuberías a lo largo de Estados Unidos, ciertamente le daría a la empresa rusa un mayor prestigio.

Pero estaría por verse si las autoridades estadounidenses le darían a Rusia la aprobación de comprar a Citgo, como hicieron en los años noventa con Venezuela.

“La gran pregunta en todo esto ahora es qué haría una administración de Donald Trump, que está enviando señales mixtas en torno a Rusia”, dijo Dallen.

“¿Cómo verían ellos el ingreso de Rusia en la industria petrolera de Estados Unidos? ¿En base a qué tomarían ellos una decisión? Esas son las mayores interrogantes”, agregó.

http://www.elnuevoherald.com/noticias/mundo/america-latina/venezuela-es/article123976719.html

Bloomberg: Sweetened PDVSA Bond Swap Has Traders Ignoring Congress’s Threat

venny-bondsWhile PDVSA is generally exempted from national assembly oversight because of its status as a separate company, the addition of Citgo as collateral creates a legal gray area, said Russ Dallen, a managing partner at Caracas Capital.

Caveat emptor,” he said. “I don’t believe the swap will be successful for this and other reasons. I think the rally in Venezuela and PDVSA debt is more the result of low liquidity and low bond inventory resulting from investment bank traders not wanting to be too long and too wrong in this credit than any market optimism over the deal.”

http://www.bloomberg.com/news/articles/2016-10-04/sweetened-pdvsa-bond-swap-has-traders-ignoring-congress-s-threat

Barron’s: OPEC & China Stats On Venezuela – No Oil Cash Left?

Cash-strapped Venezuela did not publish oil production numbers for July.

But OPEC’s latest stats on Venezuela show two important things, according to lawyer, banker and editor Russ Dallen’s missive today. The head of Caracas Capital and editor of the Latin America Herald Tribune writes:

” … by Venezuela’s own submitted count, its oil production has fallen from 2.587 million barrels per day (bpd) at the start of the year to 2.364 million bpd by the end of June … an admitted decline of 223,000 bpd in 6 months. … OPEC calculates Venezuela’s fall in production from January to July as 259,000 barrels per day lost. Second, that OPEC calculates that Venezuela barely produced over 2 million bpd in July.

While 2.095 million bpd is nothing to shake a stick at for most countries, that is down from 3.5 million bpd when Venezuela President Hugo Chavez was elected in 1998. More importantly Saudi Arabia, which has lower oil reserves than Venezuela, is producing 10.477 million bpd…”

OPEC estimates for July oil production, based on secondary sources, show  big declines in Venezuela, Nigeria and Libya. (Larger image available.)

The monthly OPEC data based on direct communication with producer countries is incomplete, and shows increases for those countries that reported. The data from OPEC, using ‘secondary sources,” estimates Venezuela production slipped 40% in July, and that Nigeria’s oil production took a bit hit as unrest in the country’s oil-producing south shuttered facilities. Production in Libya was also lower, while that in Saudi Arabia, the United Arab Emirates and Iran was higher.

China is also in the mix, Dallen notes:

” … as PDVSA’s [state-run Petroleos de Venezuela] financials also reveal, Venezuela sent an average of 579,000 bpd to China in 2015 to repay the $65 billion that China has loaned Venezuela … China has already paid for that oil with $65 billion in loans to Caracas and Venezuela has already spent that money, … suddenly you have just 900,000 bpd to generate hard cash from export — the bulk of which (around 700,000 bpd) goes to the USA and Citgo in particular, making the USA Venezuela’s biggest customer). According to the Energy Information Agency, Venezuela’s exports to the USA netted Caracas just $4.3 billion for the first 6 months of the year … before the actual lift costs to Venezuela, which are between $10 to $23 a barrel, which is why there is not enough money to pay for food or medicine or bond payments …

http://www.barrons.com