2024-07-17 18:16:14
(Bloomberg) — Ahead of this month’s presidential election, a new operation in Venezuela’s default bond market is gaining traction: buying debt from the state oil company.
Bloomberg’s most read
A handful of investors, including William Blair & Co., Gramercy Funds Management and Spanish firm Auriga Global Investors, have bet on the bonds of state-owned Petróleos de Venezuela SA, which are trading for 11 cents on the dollar. They prefer to own more expensive Venezuelan sovereign bonds.
They argue that the securities will be treated similarly when the long-awaited restructuring finally takes place. The prospect of such a process has gained momentum ahead of the July 28 elections, in which President Nicolás Maduro is running for re-election against former diplomat Edmundo González. The bonds, which total about US$60 billion in principal, have been in default for nearly seven years.
“Bondholders are more optimistic that PDVSA will not be essentially left out of the picture, which is beneficial for the oil company’s bonds to close the gap with the sovereign,” said Arif Joshi, fund manager at Lazard Asset Management It is buying the debt . Lazard held PDVSA and sovereign bonds earlier this year, according to data compiled by Bloomberg.
Robert Koenigsberger, founder and chief investment officer of Gramercy, said he sees the potential for a political shift after the vote.
“They have access to the capital markets,” he said. “If you have a culture of credit, you don’t think about how you affect bondholders.”
Any restructuring is still a long way off, as it would be necessary to lift US sanctions before starting this one. But the bet on PDVSA’s bonds gained momentum in April when JPMorgan Chase & Co. including the notes in its widely emerging market indices.
Continue reading the story
Since then, the spread between PDVSA and public debt has narrowed to levels not seen since November, shortly after the US banned debt trading on the secondary market. PDVSA bonds due in 2024 trade for about 13 cents on the dollar, a gain of about 2 cents over the past three months, according to traders and price data compiled by Bloomberg. Government bonds with similar maturities are trading at around 18 cents, about the same level as three months ago.
PDVSA’s prices are unlikely to fully catch up with those of sovereign notes, which carry more weight in the indexes and owe more interest. However, bullish managers see the gap narrowing, offering a quick recovery.
Jared Lou, an investor at William Blair, said the rebalancing of the index provided a buying opportunity in addition to the value of the spread between PDVSA and sovereign bonds.
“The price difference between the two was not justified,” he said.
Original Note: Traders Move into Venezuela Oil Bonds as Presidential Vote Approaches
MORE CONTENTS IN SPANISH:
Bloomberg in Spanish on YouTube
Follow us on X at @BBGenEspanol
Get to know our WhatsApp channel
And also TikTok @bloombergenespanol
©2024 Bloomberg LP
#Operators #bet #PDVSAs #bonds #days #elections