February 9, 2007
Venezuela issues $5 billion in bonds

(Venezuelanalysis.com)- "Ricardo Sanguino, head of the Venezuelan National Assembly's finance commission, announced that the government planned to issue US$5 billion (€3.85 billion) in bonds, as part of a drive to curb a growing rise in the inflation rate.

Sanguino said that Venezuela's state-owned oil company, PDVSA, would sell US$3.5 billion (€2.7 billion) in bonds, and the Ministry of Finance would issue another US$1.5 billion (€1.16 billion) in joint 'Bonds of the South' with Argentina, according to the AP.

Although dates for the sale of the bonds were not given, Sanguino said the bonds would 'most probably' be issued in the local currency, Bolivars, at the official US dollar exchange rate of 2,150 bolivars per dollar.

In November last year Venezuela and Argentina successfully sold their first US$1 billion (€770 million) worth of 'Bonds of the South.' Demand for these first bonds exceeded the amount on offer by more than nine times, the Ministry of Finance said at the time. The Chávez government hailed these bond sales as a further step in Latin American integration.

It is hoped that the bond sales announced Wednesday will contribute to lowering inflation by soaking up some of the high amounts of liquidity in the economy at present (...)

Also, Venezuela's recently appointed Minister of Finance, Rodrigo Cabezas announced the government was designing an anti-inflation package that aimed to bring inflation down to 12 percent this year.

'In the announcements that will be made in the macroeconomic area, we expect that measures will be taken in the areas of exchange-rate, fiscal, monetary and the real economy,' said Cabezas, according to the Venezuelan daily, El Universal.

According to BCV figures, between 1999 and 2006 the inflation rate under the Chávez government has averaged 19.3 percent. This compares with 59.6 percent under the previous government of Rafael Caldera (...)".