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4 年前
Squeeze yield from PDVSA: buy 2014, short 2022 debt-Credit Suisse
2013年11月4日 / 晚上9点18分 / 4 年前

Squeeze yield from PDVSA: buy 2014, short 2022 debt-Credit Suisse

NEW YORK, Nov 4 (Reuters) - Investors looking to squeeze more yield out of debt issued by Venezuela's state-run oil company, Petroleos de Venezuela (PDVSA), should look to buy bonds maturing in 2014 and short bonds maturing in 2022, Credit Suisse said on Monday.

Venezuelan government debt yield spreads have widened precipitously over the last 3-1/2 years, although they have stabilized from their worst levels in the first quarter of 2013, according to JPMorgan data.

A widening spread indicates increasing risk associated with the sovereign as well as quasi-sovereign credits.

Oil provides 96 percent of the revenue earned by the government, a member of the Organization of the Petroleum Exporting Countries.

Despite Venezuela's vast oil wealth, inflation is running at a 50 percent rate annually, while currency controls first installed in 2003 put the official exchange rate at 6.3 Bolivars to the U.S. dollar. On the black market, it is believed the dollar goes for seven times that rate.

Credit Suisse wrote clients that buying U.S. dollar-denominated 2014 PDVSA debt "presents an opportunity to own a cheaper bond in the short-end of the PDVSA curve." Owning this maturity also lowers investor exposure to "issuance risk in the belly of the curve," the firm wrote, citing its expectation for $5 billion of combined public sector (debt) issuance in 2014.

"Based on the current maturity profile and electoral calendar, it seems that potential supply could be in the 10-year sector," the firm wrote, adding that it sees a low risk of a default in the near term despite a deterioration in investor sentiment toward Venezuela.

Municipal elections are in December, after which many private economists predict a currency devaluation. The government says such talk is unjustified scaremongering.

Credit Suisse believes the 2022 PDVSA issue is the most expensive issue in the middle of its yield curve and most vulnerable to new supply.

Currently, the PDVSA 2014 issue is trading up 0.025 points in price to bid 93.525, yielding 12.137 percent while the PDVSA 2022 is trading down 0.90 points in price to bid 97.60, with a yield of 13.225 percent, according to Reuters data.

Credit Suisse said it is targeting a yield spread of 200 basis points between the PDVSA issues with a stop-loss of 80 basis points.

"The main risk to this trade is a sustained drop in the price of the Venezuelan oil mix to below $80 per barrel," Credit Suisse said.

Venezuelan crude tends to trade at a 5-10 percent discount to benchmark Brent crude, which settled at $106.23 per barrel, up from a four-month low reached earlier on Monday.

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