Venezuela says PdV will not miss debt payments
Caracas, 26 October (Argus) — Venezuela´s state-owned PdV will not miss tomorrow's scheduled $984mn bond maturity payment despite having missed almost $600mn of bond interest that was due in the first half of October, central bank and PdV officials told Argus.
PdV's bond maturities over the coming week include $984mn due tomorrow, $90mn due on 28 October and almost $1.17bn due on 2 November, totaling more than $2.24bn. If PdV misses any of these payments, it would trigger an immediate default because the contracts underpinning the three bonds in question - PdV 2017, PdV 2020 and PdV 2022 - do not feature 30-day grace periods for late payments.
But Venezuelan government finance officials insist unanimously that PdV will not default.
Venezuela "will continue faithfully honoring all of its debt obligations, including the late interest payments this month, despite efforts by the US government to hurt the country by crippling PdV financially with sanctions," a palace official told Argus.
"Venezuela has delayed interest payments on seven PdV and sovereign bonds this month because of the US sanctions, but we're still within the 30-day grace period before default clauses on those bonds are triggered, and we will fully cover all bond payments due in 2017," the official added.
Ven bonds dropped across the board today on growing concerns that a PdV default may be imminent.
It is not clear where PdV will get the cash to pay the looming debt. But the company and the central government have repeatedly eluded default in recent years through fresh loans, asset sales or financial maneuvers.
PdV effectively is already in commercial default with its joint venture partners, oil services firms and contractors that are owed up to a combined over $30bn in addition to the company's over $30bn of outstanding bond debt, according to the central bank's debt tables.
PdV this year has missed two debt payments to Russia, including a $1bn debt owed for arms purchases. Moscow and Caracas currently are restructuring the weapons-related debt, but oil-related financial negotiations between PdV and Russian state-controlled Rosneft are "progressing more slowly than expected," the palace official said.
PdV also owes Russia and China up a combined 10mn bl in crude and refined products owed on oil-backed loan agreements the company is struggling to catch up with as upstream output continues falling. Oil services firm Schlumberger also noted in an SEC filing this month that it may write off about $500mn owed by PdV.
The central bank's debt tables show that PdV owes oil services firms and contractors almost $18bn, with a further $13bn in "other debts" that include revenues its joint venture partners cannot repatriate because Venezuela's hard currency reserves total only $98bn of which less than $1bn is cash.
Venezuela's total debt including both PdV and the central government totaled about $168bn as of mid-2017, with PdV accounting for $71.5bn and the central government for about $96.5bn, according to the central bank.
PdV's debt total does not include about $28.5bn booked as central government debt to China that PdV is repaying with crude and products shipments.