Halister News

--GREG SULLIVAN

(Bloomberg) -- Nicolas Maduro’s government will pool funds from any and all sources to meet debt obligations on PDVSA and sovereign bonds, Michael Roche, an emerging-market fixed income strategist at Seaport Global Holdings, wrote in a note.

• Seaport recommends PDVSA bonds over sovereign; nation will prioritize oil company due to importance of foreign-currency earnings and expected difficulties in restructuring its debt
• Roche says PDVSA 8.5% 2020 and CITHOL 10.75% 2020 bonds are attractive in scenario PDVSA opts to sell its subsidiary and keep servicing debt
• Higher oil prices and reformed energy sector could reduce high probability of sovereign default in medium term, Roche said
• Roche estimates $3.9bn funding gap in 4Q 2017, $6.5bn in 2018
• For 4Q 2017, PDVSA’s cash export net earnings, central bank net currency reserves and foreign direct investment proceeds total ~$4 bn, vs ~$7.9bn in imports and foreign debt payments, he said
• Staying current on bonds depends on oil prices returning to $90/bbl, or monetization of $7.6bn in gold reserves, drawing cash from BANDES, renegotiating bilateral loans or securing new FDI, Seaport said
• Roche says victory for regime in recent elections was "engineered to provide a cloak of legitimacy" for continued support by China and Russia

To contact the reporters on this story: Daniela Guzman in New York at dguzman26@bloomberg.net; Katia Porzecanski in New York at kporzecansk1@bloomberg.net To contact the editors responsible for this story: Rita Nazareth at rnazareth@bloomberg.net Alec D.B. McCabe

--DEREK WALLBANK

(Bloomberg) -- Mizuho sees JBS having one of the best quarters ever in terms of Ebitda margin, positive free cash flow generation and deleveraging, helping ensure the rollover of bank lines to avoid any liquidity pressures, according to emailed report.

• “We have discussed the liquidity situation with several market participants and strongly disagree with Moody’s and S&P view, questioning JBS’ ability to refinance its short-term debt that comes due in the middle of next year”
• “S&P and Moody’s now rate JBS lower than Marfrig, which in our view makes no sense”
• NOTE: JBS Downgraded to B From B+ at S&P, Outlook Negative
• NOTE: JBS Shares, Bond Extend Drop After Moody’s Downgrade

To contact the reporter on this story: Ney Hayashi in Sao Paulo at ncruz4@bloomberg.net