CARACAS, April 7 (Reuters) - Venezuela’s central bank has agreed to a repurchase agreement that would provide at least $300 million from New York-based investment fund Fintech Advisory Inc amid a cash crunch, two market sources and a source close to the government told Reuters on Friday.
The crisis-wrought country has spent months negotiating with investment banks, offering bonds as a guarantee, as it seeks to boost liquidity ahead of steep debt payments that begin next week, Reuters reported in February.
Venezuela’s oil-dependent economy is suffering a brutal recession that has millions of people skipping meals amid steep inflation and low salaries.
Opposition lawmaker Rafael Guzman on Monday said the central bank was negotiating with Fintech, run by financier David Martinez, to obtain cash, using bonds issued by state oil company PDVSA as guarantee.
Martinez is known for reaping big profits from bets on distressed assets in countries including Argentina and his native Mexico. This is the first known instance of him investing in Venezuela.
“The operation has been approved,” said a source close to the government who had access to the deal’s details and asked to remain anonymous because he was not allowed to speak about it publicly.
The bank agreed to the transaction known as a “repo” using around $1.3 billion in bonds held by the institution, the source added.
The central bank’s board has already approved the operation, according to two other sources in the finance sector.
Neither the central bank or Fintech Advisory responded to a request for comment.
As PDVSA bonds are trading for up to less than half their worth amid some market fears of a default down the road, the central bank decided to seek private financing deals instead of bond sales.
“This is the most viable and legal option they could take at the moment,” a Caracas-based trader added. (Writing by Alexandra Ulmer; Editing by Chizu Nomiyama)