Carlos Becerra | Bloomberg | Getty Images
Employees of Petroleos de Venezuela SA (PDVSA) wave flags during a swearing in ceremony for the new board of directors of Venezuela’s state oil company in Caracas, Venezuela, on Tuesday, Jan. 31, 2017.
The price of Venezuelan bonds rose across the board Tuesday on a report that the nation’s state oil giant has made good on two missed interest payments and had approved funds ahead of a critical debt deadline.
PDVSA has not made an announcement about the payments or the approval, but if confirmed, it would alleviate an immediate threat to the viability of embattled President Nicolas Maduro’s regime. Venezuela is in the middle of full-blown economic crisis and has suffered severe food shortages, violent street clashes and runaway inflation.
Macroeconomic research firm Ecoanalitica on Tuesday reported on Twitter that Petroleos de Venezuela SA had disbursed nearly $122 million in overdue interest payments. PDVSA, as the company is known, has also cleared a $984 million principal and interest payment on a note — the first of two make-or-break debt payments coming due within the next two weeks.
@ecoanalitica: Investors should see these funds between today or tomorrow
The first critical payment, due on Friday, is on a note that is secured by PDVSA’s Houston-based refining firm Citgo. PDVSA stood to lose control of 50.1 percent of the company if it defaulted.
Following Ecoanalitica’s tweets, the note rallied to nearly 85 cents on the dollar and was yielding 21.6 percent to maturity. On Monday, it was trading at 81 cents on the dollar with a 26 percent yield to maturity. The yield on the note tightened about 400 basis points. Bond yields fall as prices rise.
“The fact that they’re paying that literally has caused the market to bounce a couple of points,” said Russ Dallen, managing partner at Caracas Capital Markets, which runs the Venezuela Opportunity Fund. “There was no word from the government, no payment, so it was just looking like they were just going to default.”
PDVSA’s next major debt market obstacle comes on Nov. 2, when it must pay $1.2 billion on a bond that is maturing.
Venezuela had missed $586 million in payments tied to the debt of the government, PDVSA and the utility Electricidad de Caracas this month.
