Venezuela to Pay 15.25% Yield on $3 Billion of Bonds - Bloomberg http://www.bloomberg.com/news/print/2010-08-10/pdvsa-to-sell-3-billi...

Venezuela to Pay 15.25% Yield on $3 Billion of Bonds

By Daniel Cancel - Aug 10, 2010

Venezuela may pay a yield of 15.25 percent on $3 billion of bonds, the country’s first local market sale
since October, Barclays Plc said.

The 12.75 percent notes, which mature in 2022 and will be sold at a price of 100 percent of face value,
will offer an implicit exchange rate of 4.95 bolivars per dollar, Barclays analysts Alejandro Grisanti and
Juan Cruz wrote in a report today from New York.

Venezuela, which sets two exchange rates for imports and a third rate that is determined by the central
bank, is seeking to meet demand for dollars among companies and individuals after President Hugo
Chavez closed the unregulated currency market in May. Yields on Venezuela’s benchmark 9.25 percent
bonds due in 2027 jumped 12 basis points, or 0.12 percentage point, to 13.4 percent today on concern
the new issue will create a supply glut, according to data compiled by Bloomberg.

“Generally Venezuelan bonds tend to yield higher than other securities on the curve when they hit the
market,” Grisanti said in a phone interview. “The coupon and yield were set high so that the exchange
rate stays below the rate at the central bank.”

Venezuela will issue about $1 billion of the bonds to banks to supply the central bank’s currency
market, known as Sitme, according to Barclays. The central bank administers the buying and selling of
dollar-denominated bonds at Sitme at an average exchange rate of 5.3 per dollar. The bank limits
companies to $50,000 a day and $350,000 a month for imports.

‘Easy to Sell’

Sitme has traded $1.14 billion since opening on June 9.

Venezuela may increase the size of the offering to $4.5 billion because of demand from local investors,
according to Asdrubal Oliveros, a director at Caracas-based consulting and economic research firm
Ecoanalitica.

“It will be very easy to sell these bonds because of the conditions for locals,” Oliveros said. “The
government will attract demand of at least double the original amount.”

Finance Minister Jorge Giordani told reporters today in Caracas that any decision to boost the size of
the offering would be made by the government at a later date.

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Venezuela to Pay 15.25% Yield on $3 Billion of Bonds - Bloomberg http://www.bloomberg.com/news/print/2010-08-10/pdvsa-to-sell-3-billi...

Fitch Ratings assigned a long-term foreign currency rating of B+ to the bond today, in line with
Venezuela’s issue default rating with a stable rating outlook.

“Venezuela’s comparatively low government debt burden, its government’s demonstrated willingness to
service debt even during financial stress, and its manageable debt maturity profile support the
sovereign’s ratings at the current level,” Fitch said today in a statement.

State oil company Petroleos de Venezuela SA may sell $3 billion of bonds in the fourth quarter,
Grisanti said, citing talks with the company and central bank officials during a recent trip to Caracas.

A spokesman at PDVSA, as the company is known, declined to comment on the report. A central bank
spokesman wasn’t available to comment.

To contact the reporter on this story: Daniel Cancel in Caracas at dcancel@bloomberg.net.

®2010 BLOOMBERG L.P. ALL RIGHTS RESERVED.

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