Maduro invites bondholders to ‘talks’

RUNNING EMPTY::Venezuela’s international reserves have fallen to US$9.873 billion, but are mostly tied up in gold that cannot be used without certification elsewhere

Reuters, CARACAS

Sun, Sep 10, 2017 - Page 16

Venezuelan President Nicolas Maduro has invited bondholders to unspecified “negotiations” over the country’s foreign debt in coming days, in response to recent US financial sanctions.

With Venezuela deep in recession and its currency reserves at their lowest in more than two decades, the Maduro government and state oil company Petroleos de Venezuela SA (PDVSA) have to pay about US$4 billion in debt and interest during the rest of this year.

“All bondholders are invited to various rounds of negotiations over the next few weeks,” Maduro said in a speech late on Thursday to the new Venezuelan Constituent National Assembly.

He reiterated Venezuela would keep honoring debt, but said he wanted to talk with bondholders affected by sanctions recently imposed by US President Donald Trump.

Maduro said Venezuelan Vice President Tareck El Aissami, already under US financial sanctions over drug trafficking allegations, and Venezuelan Minister of Planning and Finance Ramon Lobo would coordinate talks and some “bilateral conversations” with bondholders had already begun.

In the same speech, Maduro said Venezuela would seek to “free” itself of the US dollar and “implement a new system of international payments” using currencies such as the yuan, yen, rupee, euro and ruble.

In another speech on Friday, Maduro said that Venezuela would begin selling its oil, gas, gold and “all products” in currencies other than the US dollar, but gave no further details of the intended changes in export transactions.

Last month, Trump signed an executive order that prohibits Americans from dealing in new debt issued by the Venezuelan government or PDVSA.

Washington has also sanctioned PDVSA’s finance boss, Simon Zerpa, meaning US businesses are barred from dealing with him, and even Maduro himself in measures intended to punish the Venezuelan government for alleged corruption and rights abuses.

The OPEC member of 30 million people is in the fourth year of a recession, with its population grappling with triple-digit inflation and shortages of food and medicine.

Venezuela’s international reserves on Wednesday stood at US$9.873 billion, compared with nearly US$30 billion five years ago, central bank data showed. They are at their lowest level since 1995.

Most of the country’s reserves are tied up in gold that cannot be used in financial transactions without going through a certification process in another country.

Although Maduro gave no further details of what his government wanted to discuss with bondholders or where talks would be held, he did say 74 percent were American or Canadian.

Three bondholders consulted by reporters said they had not received any formal approach to dialogue, although two said intermediaries for the government had been communicating with some investors informally.

The Washington-based Institute of International Finance, which represents large banks and financial institutions, said it was advising a group of holders of Venezuelan bonds.

“This informal group will take note of the Venezuelan announcements and discuss how to proceed,” institute executive managing director Hung Tran told reporters.

The group was made up of bondholders from the US and elsewhere, he said.

Venezuela could not change the currency of bonds without agreement by all or a large majority of holders, Tran said.