(Adds bond trader and research report quotes, details on
pending debt payments)
March 31 Bonds issued by the Venezuelan
government crashed on Friday as political tensions escalated
following the annulment of the country's legislature by its high
court earlier this week, a move that ignited protests and
The price on Venezuela's benchmark $4 billion bond maturing
in September 2027 with a 9.25 percent coupon fell by more than
3.5 cents to around 46.4 cents on the dollar, Thomson Reuters
Its yield, which moves in the opposite direction of price,
shot up by 1.55 percentage points to nearly 23 percent, the
highest since last August. It was the largest one-day rise in
yield since October.
The country's high court late Wednesday stated it was
assuming Congress' role in a ruling authorizing President
Nicolas Maduro to create oil joint ventures without the
previously mandated congressional approval.
The move was met with international condemnation and street
protests, and on Friday the fallout intensified when Venezuela's
attorney general broke ranks with Maduro and rebuked the
judiciary for its move.
Some longer-dated bonds were even lower in price. The less
widely traded March 2038s, with a 7 percent coupon, were bid at
40 cents on the dollar, down from 42.6 cents on Thursday. Their
yield rose to 18.22 percent from 17.17 percent.
"People saw risk worsen and went out to sell. But there are
some people buying, few, but they're buying," said a bond trader
in Caracas, asking to remain anonymous to avoid hurting
business. "I hope they pick up again given there are interest
and capital payments soon."
The country faces payments of nearly $3 billion in April on
bonds issued by the government and Petroleos de Venezuela SA, or
PDVSA, the state-sponsored oil company. Most of that is due
around mid-month as PDVSA's April 2017 5.25 percent note
matures, requiring a combined interest and principal payment of
Maduro's government has pledged to remain current on its
credit. It faces another big block of payments in
both October and November, though one research firm said it was
optimistic it would be able to meet those obligations.
"While most market participants seem confident about state
oil company PDVSA's ability to pay its April maturities, many
investors remain worried about the October/November payments,"
analysts at Oxford Research wrote in a report on Friday. "Our
analysis shows that although the financial situation remains
very tight, the country can bridge its external financing gap
(Writing by Dan Burns; Reporting by Alexandra Ulmer and Corina
Rodriguez Pons in Caracas and Sujata Rao-Coverley in London;
Editing by Jeffrey Benkoe and Chizu Nomiyama)