Economy & Business - July 2003

Tobí­as Nóbrega, the finance minister, is exploiting the provisions of the exchange control system, which has created a demand for dollars. He is targeting a US$500m issue at domestic investors, but offering them only 7% interest. On the forthcoming international seven-year dollar bond, Venezuela will have to pay 10% to investors.

The international issue will be launched in September. The government has picked ABN Amro and Citigroup to lead the first issue of US$500m in August

Altogether, the government is planning to issue foreign debt bonds worth US$2bn.

Domestically, the government is also issuing US$500m in bonds to refinance maturing repayments on its US$3.8bn of Brady bonds due between now and 2007.

Potential local purchasers can buy the bonds in bolí­vares at the official rate of 1,600 to the US dollar and then sell them abroad for dollars. This makes them an extremely attractive option for local investors, as the US dollar is currently selling for around Bs2,900 on the black market.

The minimum purchase level for the new bonds will be set at US$1,000.

The funds generated by the new issue will allow the government to buy back the Bradies, which are scheduled to mature in 2005, 2007 and 2008.

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