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In reply to the discussion: STOCK MARKET WATCH -- Friday, 8 January 2016 [View all]Proserpina
(2,352 posts)27. How Venezuela Got No Dollars From $65 Billion Bond Sales
http://www.bloomberg.com/news/articles/2014-10-07/how-venezuela-came-away-with-no-dollars-from-sales-andes-credit
In the past decade, Venezuela and the nations oil company Petroleos de Venezuela SA have sold $65 billion of dollar-denominated bonds without ever seeing a dime.
Sure, they got money, but took in no dollars. To preserve foreign reserves while injecting some much-needed hard currency into the economy, the government, PDVSA and the central bank sold the debt to local investors in return for bolivars. Buyers then sold the notes abroad to obtain U.S. currency, which has become scarce as Venezuela tries to limit capital flight.
$4.5 billion of debt came due October 2014 and with reserves at an 11-year low, Venezuela is realizing the bond sales didnt actually buy it much time and are instead exacerbating a cash crunch thats fueling concern the country will default. The nations bonds have plummeted 9.5 percent Sept. 2014, the most in emerging markets.
Bonds were being sold as a foreign-exchange mechanism and then being flogged out at a deep discount, so the government has got a big foreign currency liability and absolutely nothing to show for it, David Rees, an economist at Capital Economics in London, said by phone...
a look into the past
In the past decade, Venezuela and the nations oil company Petroleos de Venezuela SA have sold $65 billion of dollar-denominated bonds without ever seeing a dime.
Sure, they got money, but took in no dollars. To preserve foreign reserves while injecting some much-needed hard currency into the economy, the government, PDVSA and the central bank sold the debt to local investors in return for bolivars. Buyers then sold the notes abroad to obtain U.S. currency, which has become scarce as Venezuela tries to limit capital flight.
$4.5 billion of debt came due October 2014 and with reserves at an 11-year low, Venezuela is realizing the bond sales didnt actually buy it much time and are instead exacerbating a cash crunch thats fueling concern the country will default. The nations bonds have plummeted 9.5 percent Sept. 2014, the most in emerging markets.
Bonds were being sold as a foreign-exchange mechanism and then being flogged out at a deep discount, so the government has got a big foreign currency liability and absolutely nothing to show for it, David Rees, an economist at Capital Economics in London, said by phone...
a look into the past
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