Venezuela, PDVSA pare losses as U.S. mulls trading restrictions; Shinhan Bank roadshow eyed

By Rebecca Melvin

New York, Aug. 23 – Venezuela and Petroleos de Venezuela SA bonds traded down 1 or 2 points early Wednesday but recovered some of those losses by afternoon as market players reacted to news that the United States is considering restricting trading in Venezuelan debt.

The Venezuela credit market was a little better but remained under pressure, a New York-based trader said after the market close.

PDVSA’s 6% notes due 2022 were trading at 28.

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.

But Stifel strategist Victor Fu said that restricting trading of Venezuela debt will not achieve the objective of hurting President Nicolas Maduro as that trading is not tied to fresh funds for the government. Instead it will hurt U.S. financial firms, Fu said.

A third source said that U.S. institutions trading Venezuela debt could be affected but that the fallout will be limited only to Venezuela debt trading.

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.

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