NEW YORK, Aug 3 (IFR) - Venezuelan bonds sold off heavily Wednesday after the ouster of the industry and commerce minister punctured hopes of a change in policy for the embattled country’s struggling economy.
Short-dated bonds from state-controlled oil company PDVSA sank multiple points in early trading before a late-day bounce as crude prices edged higher.
PDVSA’s old and new 2017s - some of the most highly traded bonds Wednesday - ended off their intra-day lows but were still two points down at 64.90 and 72.50, according to MarketAxess.
President Nicolas Maduro replaced Miguel Perez Abad, who advocated looser exchange controls, with Carlos Faria as minister of industry and commerce.
Perez was seen as a more moderate influence in Maduro’s cabinet and advocated reforming the complex currency system in Venezuela, which is on track for 500% inflation this year.
“We should have a floating-rate system in place in the next 60 days,” Perez was quoted saying earlier this week in an interview with local media.
The appointment of Faria is seen as a move back to more radical politics and a continuation of the status quo that has left the economy in tatters.
“Talk about FX unification and flexibility has clearly gone out the window,” said Jorge Piedrahita, CEO of brokerage Torino Capital.
“[Faria‘s] father was one of the founders of the communist party so I would expect anything but market-friendly to come from this guy.” (Reporting by Paul Kilby; Editing by Marc Carnegie)