Venezuela Said to Discuss Swapping Dominican Oil Debt for Cash By Sebastian Boyd - Dec 4, 2014 Venezuelaâs state oil company is discussing a deal to bring in $1.7 billion of cash in exchange for the cancellation of about $4 billion of debt owed by the Dominican Republic, a person familiar with the matter said. Under the proposal, the Dominican Republic would issue bonds to raise money for the debt it owes to Petroleos de Venezuela SA for oil purchases over the past decade, according to the person, who asked not to be identified because the matter isnât public. The transactions would be handled by Goldman Sachs Group Inc., which is acting on behalf of the Dominican Republic, the person said. No deal has been signed and the timing is uncertain, according to the person. Venezuela is under pressure to raise cash as the plunge in oil saps government revenue. Its benchmark bonds due in 2027 fell to a five-year low on Dec. 2, and the cost to insure its debt from default is the highest in the world on concern the nation will struggle to meet obligations. âEvery dollar counts when youâre this far in the hole,â said Siobhan Morden, the head of Latin American fixed income at Jefferies Group LLC. Rosarys Ysturiz, a spokeswoman for PDVSA, declined to comment. Aleida Gertrudis Plasencia, a spokeswoman for the Dominican Finance Ministry, declined to comment. The transaction was reported earlier this week by the Wall Street Journal. PetroCaribe Program OPECâs refusal last week to cut oil production after a 30 percent decline in crude prices since September will force Venezuela to devalue its currency, curb subsidies and sell off oil assets to avoid default, according to Bank of America Corp. Oil provides more than 95 percent of the dollars the country needs to pay its debts. Venezuela has sold $28 billion worth of oil to Caribbean and Central American countries under the PetroCaribe program since 2005, much of it financed with cheap loans to the purchasers. About $12 billion remains unpaid, the countryâs Foreign Minister Rafael Ramirez said in Caracas Nov. 20. PDVSA reported $6 billion of Petrocaribe-related accounts receivable at the end of last year. The Dominican Republic, the largest fuel recipient under the PetroCaribe program, is rated B+ by Standard & Poorâs, three steps above Venezuela and its state oil company. To contact the reporter on this story: Sebastian Boyd in Santiago at [email protected] To contact the editors responsible for this story: Brendan Walsh at [email protected] Bradley Keoun ®2014 BLOOMBERG L.P. ALL RIGHTS RESERVED.
Posted on: Mon, 08 Dec 2014 00:05:14 +0000
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