CARACAS/HOUSTON, Jan 20 (Reuters) - Venezuelan-owned refiner Citgo Petroleum Corp is seeking to raise $2.5 billion in loans and high-yield bonds to provide funding for Venezuela, Thomson Reuters IFR reported on Tuesday.
Sole bookrunner Deutsche Bank has announced plans for a $1.5 billion bond to be issued by Citgo Holdings, with roadshow details expected to emerge next week, reported IFR, without citing sources.
The German bank has also scheduled bank meetings for Thursday in New York to launch a $1 billion senior secured first lien five-year term loan B, according to IFR.
Both Venezuela’s state-run PDVSA and its U.S. oil refining and marketing unit Citgo did not immediately respond to requests for comment.
Citgo’s assets, including a refining network with capacity to process up to 750,000 barrels per day (bpd) of crude, have been up sale since 2014. Several bidding rounds have been held by banking firm Lazard Ltd, hired by PDVSA to manage the operation.
Although Venezuela’s finance minister in October denied the pending sale, Lazard has continued with the process in recent months, according to sources close to the deal. Offers from at least four bidders were received as of mid December.
Citgo’s board of directors had originally discussed a bond issue in 2014 as an alternative to raise cash for Venezuela while avoiding a sale of assets, according to sources close to the conversations. It is not clear if this operation will affect the ongoing sale process.
Citgo announced in mid 2014 that it had finished a refinancing operation to reduce interest payments, which improved its credit profile. But agency Moody’s downgraded PDVSA and Citgo’s rating last week due to a higher probability of default.
Venezuelan bonds have tumbled in recent month as investors worry it could struggle to make sizeable debt payments amid tumbling oil prices and slipping international reserves.
President Nicolas Maduro says the country will honor all its debt payments and dismisses debt default as a right-wing smear campaign. (Reporting by Brian Ellsworth in Caracas and Marianna Parraga in Houston; Editing by Marguerita Choy)