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Morning Commentary: Venezuela, PDVSA off as U.S. mulls trading restrictions; Shinhan sets roadshow
By Rebecca Melvin
New York, Aug. 23 – Venezuela and Petroleos de Venezuela SA bonds traded down 1 or 2 points early Wednesday, and the market remained under pressure as market players reacted to news that the United States is considering restricting trading in Venezuelan debt.
PDVSA’s 12¾% notes due 2022 were trading at 44.75, down from 45.65 late Tuesday and down from 46.75 earlier in the week.
The market is reacting to this uncertainty, a New York-based trader said. “We have to wait and see what kind of sanctions they are going to be, whether they are light or tough.”
A U.S. ban is being considered as a way to pressure Venezuelan president Nicolas Maduro who has undermined the country’s democracy by sidelining the opposition-controlled congress and taking other steps that mark an oppressive or totalitarian regime.
According to reports, the move would temporarily ban U.S.-regulated financial institutions from buying and selling dollar-denominated bonds issued by Venezuela or PDVSA, the state-owned oil company. The ban would be a way to hurt the regime without hurting the people of Venezuela, who are already suffering under the throes of economic, social and political crises.
Spreads easier
Elsewhere emerging secondary market trading was quiet and dull, a London-based trader said, with spreads just slightly wider, but “nothing to get too excited about.”
The primary markets were quiet, but in Asia, Shinhan Bank announced a roadshow for a possible dollar-denominated deal that would price sometime after Sept. 8 when investor meetings conclude.
The Seoul, South Korea lender has mandated BofA Merrill Lynch, BNP Paribas, HSBC and MUFG to arrange the meetings for fixed-income investors.
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