Venezuela, PDVSA sell-off intensifies; new JSL notes trade a little above issue price

By Rebecca Melvin

New York, July 20 – Selling intensified in Venezuela and Petroleos de Venezuela SA bonds on Thursday as investors continued to weigh the specter of potential sanctions against the country by the United States and possibly other nations.

Trump administration officials said on Tuesday that they are considering penalties, including another round of personal sanctions and economic ones such as barring oil imports from Venezuela – the third largest supplier of foreign oil to the United States after Canada and Saudi Arabia – if Venezuela’s president, Nicolas Maduro, proceeds with plans to rewrite the country’s constitution.

PDVSA’s near-dated 8½% notes due 2017 were indicated at 80¾ bid, 81¾ offered on Thursday, which was down from 83¼ bid, 84½ offered on Wednesday, according to market sources. That bond was 91 bid, 92 offered on June 5.

Possible sanctions, which were tied to Maduro going ahead with a July 30 vote to form a constituent assembly tasked with rewriting the country’s constitution, seemed to boost trade in other potential crude oil producers, including those of Mexico and Brazil. Colombia has also been cited as a potential supplier of U.S. oil needs.

In the primary arena, the new JSL SA 7¾% notes due 2024 were mostly flat in active trade after the Brazilian conglomerate priced $325 million of the seven-year paper via subsidiary JSL Europe SA. The issue price was 99.337.

The new JSL notes were better at 99.5 bid, 100 offered, compared to issue.

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