PDVSA 2016s rally following payment news

viernes 26 de febrero de 2016 13:38 GYT

By Paul Kilby

NEW YORK, Feb 26 (IFR) - PDVSA 2016s rallied on Friday as investors bet on a higher likelihood of short-term debt payments following a surge in oil prices and reports that Venezuela had retired a maturing bond.

PDVSA's 5.125% 2016s were being quoted at 73.75-75.75, marking a nearly five point leap since Wednesday's close.

"Everyone is looking to buy PDVSA 2016s, but holders are not inclined to let the bond go at these levels," said a New York based broker.

"The paper doesn't pay principal until the fourth quarter, so if you sell at these levels you are leaving a lot of principal on the table."

A US$25.63m coupon payment is due on the PDVSA 2016s on April 28 followed by an approximately US$1.025bn interest and principal payment on October 28.

Although local reports about a US$1.543m payment on the sovereign's 2016s maturing on Friday were widely expected, the news brings some relief to a market concerned about a default scenario this year.

One holder of the Venezuela 2016s said he had yet to receive payment confirmation, but typically it takes a couple of days to reach bank accounts.

"By Monday it will be there. I don't expect them not to pay," the investor said, noting that the bonds were being quoted at par." We would have heard by now if they didn't pay."   Continuación...