Venezuelan state oil producer PDVSA’s bond prices dropped after the company again extended a deadline for its $5.3 billion debt swap offer, suggesting investors may be hesitant to partake.
PDVSA moved the date for both the early deadline and the expiration to Oct. 17, from Oct. 12 and Oct. 14, respectively. The swap requires more than 50 percent participation to go through.
If low participation scuttles the swap, investors may lose their recently gained optimism that PDVSA can avoid defaulting on its heavy bond obligations. The company is struggling with low oil prices, slumping production and an extreme cash flow deficit that has left it unable to pay contractors on time.
President Nicolas Maduro has insisted Venezuela and PDVSA will make all debt payments and dismissed default talk as part of a politically motivated campaign against his socialist government. Sources said central bank president Nelson Merentes reiterated Venezuela’s willingness to pay in a rare private meeting with two dozen investors on the sidelines of the IMF/World Bank meetings in Washington last week.
The company’s 2017 bond maturing in April fell 0.1 points to a bid price of 81.550 in afternoon trade, while the 2017N bond dropped 1.350 points to a bid price of 86.750. The two bonds are part of the swap operation. The swap allows investors to exchange bonds maturing in 2017 for a new bond maturing in 2020 that is backed by shares in U.S. subsidiary Citgo Holdings Inc.