September 29, 2004
Venezuela issues $1.5 bln bond yielding 9.269 pct
(Reuters) - "Oil producer Venezuela, its coffers swelled by soaring petroleum prices, sold $1.5 billion of 10-year bonds at a price yielding 9.269 percent, deal managers said.

Around $710 million in the operation handled by Barclays Capital and Merrill Lynch was used to retire Brady Bonds maturing in 2007 and 2008. The remaining $790 million was for cash.

The 2014 bond carried a spread of 520 basis points over comparable U.S. Treasuries, a price of 95.056 cents to the dollar and a coupon of 8.5 percent, the managers said in a statement (...)
It was the first new debt issue by President Hugo Chávez's government since the leader won an Aug. 15 referendum on his rule over the world's No. 5 oil exporter.

The operation was part of the South American country's efforts to refinance its domestic and foreign debt and ease a crunch in short-term payments. It came at a time when Venezuela's government was enjoying an oil income windfall thanks to record high world oil prices. U.S. oil futures were hovering near $50 a barrel.

This, coupled with an easing of political tension in Venezuela following Chávez's referendum victory, had created favorable conditions for a new bond issue, analysts said.

Confidence over debt
'Strong oil revenues make it very unlikely that Venezuela could run into difficulties servicing its public debt in the near term,' José Cerritelli, an analyst with Bear Stearns in New York, said in a research note.

The Brady bonds exchanged in the refinancing deal were Front-Loaded Interest Reduction Bonds (FLIRBs) and Debt Conversion Bonds (DCBs) maturing in 2007 and 2008.

They were denominated in sterling, Swiss francs, Deutsche marks and U.S. dollars.

Venezuela repurchased some of its short-term Brady bonds last year. But this time round shorter-dated Brady bonds were not included in the exchange.
The government began a series of swaps on its domestic debt in November 2002 (…)".