Investors blow cold over PDVSA swap
By Paul Kilby
NEW YORK, Sept 16 (IFR) - News of PDVSA's bonds swap left markets in two minds this week as the Venezuelan oil company sought relief from a wall of maturities falling due over the coming months.
After months of speculation, PDVSA's president Eulogio Del Pino finally came clean when he announced the company's intention to swap existing 2016s and 2017s for a new amortising 2020 issue.
If successful, the transaction will provide much-needed breathing space to the state-owned company, which faces billions of dollars in bond maturities over the next year or so.
In the swap, PDVSA is targeting the 5.125% 2016s, the 5.25% 2017s and the 8.5% 2017s. That amounts to about US$8.26bn in outstanding debt, according to Thomson Reuters data.
But many on Wall Street doubt that the company can pull off a transaction whose ultimate success rests on heavy participation from foreign accounts.
As of Thursday, few details had been announced, but analysts say that PDVSA will have to dangle some alluring incentives to bring international holders on board.
"They will have to make the economics work so it is not viewed as a distressed exchange, which I think they will want to avoid," one investor told IFR.
Getting holders to relinquish short-term debt that could benefit from a pull to par may be tough going, however, especially if investors don't believe a default is imminent. Continuación...