Halister News

(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