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Message: Torino: Guaidó can agree with creditors and save Citgo
Torino: Guaidó can agree with creditors and save Citgo
Experts warn that next interest payment for PDVSA 2020 looks unfeasible
- MAGALY PEREZ
05/19/2019 05:30 am
Caracas .- The disbursement of 913 million dollars in October of this year, due to the expiration of part of the capital of the PDVSA 2020 bond, will entail serious problems in the Venezuelan opposition if the current scenario persists.
The warning was made by the firm Torino Economics, which referred to the payment of $ 71.5 million corresponding to the interests of the Pdvsa 2020 bond, which is guaranteed by half of "Citgo Petroleum", indicating that it created noise among the opposition with a certain level of cohesion.
According to the Torino Economics report, the next payment of the Pdvsa 2020 bond is unviable.
However, the president of the National Assembly (AN), Juan Guaidó, who appointed the company's new board of directors, "still has options to maintain control of the refining unit and save it from the embargo".
According to the economist Francisco Rodríguez, who is head of the firm, it is possible to sign a pact with the creditors in which it is agreed not to seize any assets of the Republic while the political crisis is resolved.
He stated that "as in any negotiation, firm positions must be intelligently combined with positive incentives".
In its weekly analysis, the firm argues that some of the arguments that oppose the payment of the PDVSA 2020 bond are "clearly misleading", as well as the complicity approach, which offers "the idea that the legislators of the Nicolás Maduro government they would personally benefit from payment compliance. "
Likewise, the document reports that "almost the entire bond is in the hands of institutional investors from the United States and Europe. 1,521 million dollars (90.3%) of the positions are reported in real money accounts and listed in Bloomberg, while 130 million dollars (7.7%) are in the hands of hedge funds, which are not required to publicly disclose their positions, leaving only $ 33 million, or 2.0% of the total, for local positions, "he said.
Other Arguments
But other arguments are not ruled out "the interim government clearly does not have the capacity to satisfy all the creditors who could claim their payment through Citgo," the firm says, mentioning Crystallex and Conoco Phillips, due to the demands they have made. before international tribunals for non-payment.
"However, even if the interim government had the ability to pay all these claims (for which it would need $ 5.8 billion for the payment of amortizations and $ 216 million for the payment of interest), this would probably lead to other creditors going after these assets, "said Torino's report.
In other words, if the current scenario persists, "the Guaidó administration will at some point run out of money to pay the creditors and, given the current political climate, the will to do so may end first," warns Torino.
But if a government change is achieved or an executive order of protection of assets is obtained by the United States government, canceling the obligation would grant options to the Guaidó team.
On the other hand, if the opposition in six months has not been able to produce a political change "then the argument of optionality in favor of payment will vanish and at the same time the cost to pay will be higher," the report states.
Not everything is lost
For Francisco Rodríguez, chief economist of the firm, "urges the development of a new strategy that allows Citgo to maintain ownership and that does not depend on US support, through an asset protection order or exit of the current government of Nicolás Maduro ".
"In the first place, the interim government must raise the request for an asset protection order directly to the United Nations Organization instead of only to the US government."
"At the same time, Guaidó must take a more proactive position to negotiate with creditors from a position of defense of Venezuelan interests," added the Torino Economics Report.
Met OPEC
On the other hand, it was learned that several member countries of OPEC met in Jeddah (Saudi Arabia) to evaluate the evolution of the oil market and the fulfillment of the cut in crude production during the semester and prepare the conference called for the end of the year. June in Vienna.
This is the meeting of the Joint Ministerial Supervisory Committee (JMMC) in charge of verifying the commitment agreed by OPEC and ten other independent producers, including Russia, which is called to begin its deliberations today, Sunday, May 19, until tomorrow, Monday, June 20.
This alliance of 24 countries was formed in 2016 to try to stop the fall in oil prices, which were pressured by an excess supply in the market and all its participants committed to reduce their quotas.
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