February 28, 2006
Venezuela to buy back $3.9 bln in bonds and pay multilateral loans

(Reuters) - "Venezuela said it plans to buy back $3.9 billion of Brady bonds this year and pay about $700 million in outstanding bilateral and multilateral loans in a measure to trim foreign public debt.

Finance Minister Nelson Merentes said Venezuela, the world's No. 5 oil exporter, plans to reduce its foreign public debt by around 15.2 percent this year to $26.38 billion as the government benefits from soaring petroleum prices.

'We are going through a gradual process of reducing our debt,' Merentes told reporters at a press conference.

Venezuela has joined Colombia, Brazil and Mexico in recently announcing buy backs of foreign currency denominated debt in deals analysts expect to further draw investors into domestic bond markets in Latin America.

Merentes was confirming details of a debt management plan revealed by a high-ranking finance ministry source over the weekend. As part of the debt management, Venezuela announced on it would buy back $700 million in 2020 Brady bonds by around the start of this month.

Merentes said the program was aimed at freeing up funds for more public investment and providing financing to expand President Hugo Chávez's social programs for the poor.

The early loan payments include $243 million in World Bank debt.

Venezuela wanted to bring its annual public debt service payments to between $3 billion to $4 billion and would soon carry out management operations on its domestic debt, he said.

After the buyback finishes in around four or five months, Venezuela would hold $487.2 million in Brady bonds that mature next year, the minister said.

Brady bonds take their name from former U.S. Treasury Secretary Nicholas Brady. Issued mostly for Latin American countries in the 1990s to resolve a regional debt crisis, they normally carry costlier terms than newer global bonds.

Venezuela began a debt refinancing program in late 2002 to ease a short-term crunch in service payments. Since then the government has carried out refinancing, new issues, swaps and buyback operations for around $10 billion.(...)".