Venezuela eyes double-digit yield on Citgo debt sale

viernes 23 de enero de 2015 12:13 GYT

By Davide Scigliuzzo

NEW YORK, Jan 23 (IFR) - Venezuela's US oil-refining unit Citgo will probably have to pay double-digit yields to lure investors into a US$2.5bn financing package aimed at pumping new cash into its state-owned parent PDVSA.

With some US$10bn in debt payments due this year, cash-strapped Venezuela is pledging some of its most valuable assets abroad to raise new cash, as it fends off default worries amid a steep slide in crude oil prices.

A US$1.5bn high-yield bond issue and a US$1bn senior secured five-year term loan will be sold through Citgo Holding Inc and secured by US$750m in midstream assets and a 49% pledge on the equity of Citgo Petroleum Corp, the operating entity.

Citgo has set price talk of 800bp over Libor on the five-year senior secured first-lien Term Loan B, officials from sole lead manager Deutsche Bank said on Thursday during a presentation to investors in New York.

The non-call one loan will have a Libor floor of 1% - meaning that the interest paid on the principal would be at least 9% - and will be issued at an original discount of 96-97 for an all-in yield of about 10%.

As an additional safeguard for investors, the company will be required to keep a debt service reserve account worth six months' of interest and principal payments, and use 75% of excess cashflow to pay down debt.


At a 10% yield, the loan - which will rank pari passu with the upcoming bonds - appears to offer a 275bp pick-up over Citgo Petroleum Corp's 6.25% 2022s notes, which were spotted trading at a yield of around 7.25% on Thursday.   Continuación...