(Adds comments about central bank president)
By Alexandra Ulmer and Corina Pons
CARACAS Oct 13 Venezuelan state oil producer
PDVSA's bond prices dropped on Thursday after the company again
extended a deadline for its $5.3 billion debt swap offer,
suggesting investors may be hesitant to partake.
PDVSA on Wednesday night moved the date for both
the early deadline and the expiration to Oct. 17, from Oct. 12
and Oct. 14, respectively.
The swap requires more than 50 percent participation to go
"It's illogical that PDVSA extends again the deadline
without improving the terms and will eventually have to make a
decision to go ahead with less than 50 percent participation or
suspend the transaction," said Siobhan Morden with Nomura
If low participation scuttles the swap, investors may lose
their recently gained optimism that PDVSA can avoid defaulting
on its heavy bond obligations. The company is struggling with
low oil prices, slumping production and an extreme cash flow
deficit that has left it unable to pay contractors on time.
President Nicolas Maduro has insisted Venezuela and PDVSA
will make all debt payments and dismissed default talk as part
of a politically motivated campaign against his socialist
Sources said central bank president Nelson Merentes
reiterated Venezuela's willingness to pay in a rare private
meeting with two dozen investors on the sidelines of the
IMF/World Bank meetings in Washington last week.
"He said plan A, B and C is to pay, even if the exchange
doesn't go through," an investor who attended the meeting told
IFR. "He didn't seem concerned."
But Venezuelan officials evaded more pressing questions on
PDVSA's bond swap and the availability and reliability of
macroeconomic data, according to the attendees.
The company's 2017 bond maturing in April
fell 0.1 points to a bid price of 81.550 in afternoon trade,
while the 2017N bond dropped 1.350 points to a
bid price of 86.750. The two bonds are part of the swap
"They are probably not yet at the tender threshold," said
one investor, who is planning to participate in the swap, of the
The swap allows investors to exchange bonds maturing in 2017
for a new bond maturing in 2020 that is backed by shares in U.S.
subsidiary Citgo Holdings Inc.
It was meant to ease significant payments including a $2
billion amortization in November and $5 billion in amortizations
due in 2017.
But if participation in the swap is low, bond prices will
likely fall further, according to market analysts, and PDVSA
will not get as big a financial breather.
"Honestly, I don't know whether to be scared (that
participation won't be met) or think that they're doing this to
get the maximum participation," said another investor about the
(Additional reporting by Paul Kilby and Davide Scigliuzzo;
Editing by Jeffrey Benkoe)