February 14th, 2012

Economics & Finance

Venezuela bonds gain as Chavez rival wins primary landslide

Venezuelan bonds rallied after opposition candidate Henrique Capriles Radonski won more than 60% of the vote in a nationwide primary, a margin of victory that analysts said could strengthen his bid to unseat President Hugo Chavez in October elections. The yield on Venezuela’s benchmark 9.25% bonds due in 2027 fell 30 basis points, or 0.30% point, to 11.80%, the lowest since April 2010, at 3:30 p.m. in New York, according to data compiled by Bloomberg. The bond’s price rose 1.75 cents to 82 cents on the dollar. (Bloomberg. 02-13-2012; http://www.bloomberg.com/news/2012-02-13/venezuela-bonds-rally-as-capriles-wins-presidential-primary-caracas-mover.html)

Government gives Pepsi venture 4 Days to provide water receipts

Pepsi-Cola Venezuela, C.A. has four days to provide receipts to the government after the country’s price control agency received complaints that the company raised its price for mineral water ahead of price caps. The company, a joint venture between PepsiCo Inc. and the country’s largest foodmaker, Empresas Polar, must provide receipts for the November-to-January period showing what it has been charging for the water, according to a government statement sent by e-mail today. (Business Week, 02-13-2012; http://www.businessweek.com/news/2012-02-13/venezuela-gives-pepsi-venture-4-days-to-provide-water-receipts.html)

New controlled prices of several hygiene and basic products will come into effect on March 1st, according to Vice President Elías Jaua. He said businessmen will have the right to appeal to what was reviewed and that the government would be willing to go over decisions “if there were something convincing.” (Veneconomy, 02-11-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=29400&idc=3)

Commodities

PETROBRAS gives PDVSA till 2013 to enter refinery

Brazil's PETROBRAS will allow its Venezuelan counterpart PDVSA to assume its stake in the Abreu e Lima refinery as late as 2013 when operations are expected to begin, Petrobras' supply director Paulo Roberto Costa said on Monday. Venezuela's state oil company PDVSA said last week it had managed to extend until the end of March a deadline to make its contribution to a long-delayed refinery project in northeast Brazil. PDVSA had failed earlier in February to secure a U$D10 billion loan from Brazil's state-development bank BNDES that it was counting on to pay its 40% stake in the Abreu e Lima facility. This was the latest of several deadlines that the Venezuelan company had missed in a six-year saga. (Reuters, 02-13-2012; http://www.reuters.com/article/2012/02/13/petrobras-pdvsa-refinery-idUSL2E8DDEC420120213)

PDVSA spilled 60,000 barrels of crude into river, lawmaker says

Venezuelan opposition lawmaker Hiram Gaviria said state oil company Petroleos de Venezuela SA spilled 60,000 barrels of crude oil from a pipeline into almost 140 kilometers (87 miles) of the Guarapiche River in eastern Monagas state. About 70% of the residents of Maturin, the state capital, have lost their drinking water supply since the oil spill occurred last week, said Gaviria. Members of congress’s environmental committee, which Gaviria heads, will visit Maturin Feb. 13, Union Radio reported. (Bloomberg, 02-11-2012; http://www.bloomberg.com/news/2012-02-11/pdvsa-spilled-60-000-barrels-of-crude-into-river-lawmaker-says.html)

Oil spill has been contained, Environment minister says

Environment Minister Alejandro Hitcher said that the oil spill in the eastern state of Monagas has been brought under control after an emergency was declared due to a pipeline rupture at the Jusepin Complex operated by state-owned Petroleos de Venezuela, or PDVSA. “We already have complete control of the oil spill. Ninety percent of the crude is already confined by the containment barriers and is being extracted with the different systems the petroleum industry has to deal with this type of accident,” said Hitcher. (Latin American Herald Tribune, 02-12-2012; http://www.laht.com/article.asp?ArticleId=470342&CategoryId=10717; El Universal, 02-13-2012; http://www.eluniversal.com/economia/120213/ninety-percent-of-oil-spill-in-venezuela-reportedly-collected)

Gold law curbs local mining

The reform of the decree on the Organic Law which Reserves the State the Activities of Gold Exploration and Exploitation, effective since December 15, 2011, "curbs the local mining development," according to Luis Rojas Machado, president of the Venezuelan Mining Chamber (CAMIVEN). Currently, "the sector does not show the best numbers in production, investment, employment and maintenance of equipment," he underlined. The legal framework, even with recent amendments, "does not provide incentives for companies to improve such conditions." (El Universal, 02-13-2012; http://www.eluniversal.com/economia/120213/gold-law-curbs-local-mining)

International Trade

Colombia will sell food to Venezuela at no tariff

According to Colombian authorities, the Partial Trade Agreement reached between Colombia and Venezuela provides that 91% of items traded between 2006 and 2010 will be exempt from any tariff once the agreement comes into force. More in Spanish: (El Universal, 02-14-2012; http://www.eluniversal.com/economia/120214/colombia-vendera-alimentos-al-pais-con-cero-arancel; El Nacional; http://www.el-nacional.com/)

Dangerous liaisons

Venezuela's exports to Iran are just a fraction of its imports from Iran, which in 2009 were nearly U$D 90 million. In 2010, Venezuela and Iran agreed to establish a joint development bank with an initial capital of U$D 200 million. Both countries have signed dozens of trade agreements which on paper are worth millions of dollars. Iran is also helping Venezuela build houses and raised milk factories and cars in our country. According to TAL CUAL daily, the issue that concerns all Venezuelans is if both nations can benefit from this relationship and whether we can lose many of our natural allies if the Bolivarian government continues to emphasize this relationship. More in Spanish: (Tal Cual, 02-13-2012; http://www.talcualdigital.com/index.html)

Politics

Henrique Capriles will face Hugo Chavez in race

Presidential candidate Henrique Capriles easily won Sunday's primary vote to become the single challenger against President Hugo Chavez, setting the stage for an intense campaign season leading to the general election in October. Capriles, the governor of Miranda state, was declared the winner late Sunday with about 95% of the votes counted, officials said. Zulia state Gov. Pablo Perez came in a distant second. Speaking to thousands of supporters in east Caracas on Sunday night, Capriles thanked voters who "overcame obstructions and intimidation" to vote for him. Capriles was joined at his victory speech by his four opponents in the primary race, all of whom pledged to support him in the presidential race. (Los Angeles Times, 02-12-2012; http://www.latimes.com/news/nationworld/world/la-fg-venezuela-election-20120213,0,5226846.story; Reuters, 02-13-2012; http://www.reuters.com/article/2012/02/13/us-venezuela-election-opposition-idUSTRE81B0ET20120213)

Luis Vicente León: moderation triumphed

DATANALISIS director Luis Vicente Leon said that the primary results and the triumph of Henrique Capriles show that the population favored moderate opposition political discourse versus more radical approaches. More in Spanish: (Ultimas Noticias, 02-13-2012; http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/luis-vicente-leon--triunfo-la-moderacion.aspx)

US calls primary vote “just one step” in democratic process

Mike Hammer, US Assistant Secretary of State for Public Affairs Estates called Venezuela’s primary vote “just one step” in the democratic process; adding that the democratic process must allow Venezuelans to cho0se their leaders in “free and fair” elections, More in Spanish: (El Universal; http://www.eluniversal.com/nacional-y-politica/primarias-2012/120214/eeuu-senala-que-primarias-son-un-paso-en-el-proceso-democratico)/

Capriles: the government speaks of the past, we talk about the future

Opposition presidential candidate Henrique Capriles Radonski said that "the government is stuck in the past, while our vision is the future. This is a closure." The governor of the state of Miranda said that the support he received from his opponents after the primaries is real. "All of those who were in the race... recognized the results and went immediately to our campaign team's headquarters to offer their support." (El Universal, 02-13-2012; http://www.eluniversal.com/nacional-y-politica/primarias-2012/120213/capriles-the-government-talks-about-the-past-we-talk-about-the-future)

Venezuela is world´s worst for legal disputes

Venezuela is the worst country in the world when it comes to having a legal framework that can help private businesses settle disputes, according to a Latin Business Chronicle analysis of an executive opinion survey from the Swiss-based World Economic Forum (WEF). Many foreign companies have had to take their disputes with the government of Venezuela to international for a like The World Bank's International Centre for Settlement of Investment Disputes (ICSID) in Washington, D.C. and the Paris-based ICC (International Chamber of Commerce). (Latin Business Chronicle, 02-13-2012; http://www.latinbusinesschronicle.com/app/article.aspx?id=5476)

Chavez: New satellite to contribute with technological development

The new satellite named “Generalissimo Francisco de Miranda” will be a great jump for Venezuela's independence and technological development, according to president Hugo Chavez at the farewell ceremony for a group of Venezuelan engineers leaving for China to be trained for the earth observation satellite project. This satellite is expected to contribute with the scientific, human and economic development of Venezuela, Chavez added. (AVN, 02-10-2012; http://www.avn.info.ve/node/98845)

The following brief is a synthesis of the news as reported by a variety of media sources. As such, the views and opinions expressed do not necessarily reflect those of Duarte Vivas & Asociados and The Selinger Group.