May 08, 2012

Economics & Finance

Chavez cancer fight ignites PDVSA bond rally

Debt traders are pushing up the bonds of state-owned Petróleos de Venezuela, S.A. as they envision a nation without President Hugo Chavez that may free the oil producer from a tax rate as high as 95%. The company’s U$D 26.5 billion of debentures gained 2.1% last week through May 3, the most among the 50 biggest emerging-markets issuers of dollar-denominated debt, building on April returns of 2%, Bank of America Merrill Lynch index data show. The extra yield investors demand to buy debt from the owner of U.S. refiner and marketer Citgo Petroleum Corp. compared with the average for speculative-grade U.S. energy companies has dropped by more than half this year. (Bloomberg, 05-06-2012; http://www.bloomberg.com/news/2012-05-07/chavez-cancer-fight-ignites-pdvsa-bond-rally.html)

Purchasing power in Venezuela is now what it was in 1966

A look into the past reveals that from 1950 to 1978 Venezuela was in a stellar phase in which most families reached unimaginable living standards, but then it all came crushing down, and prolonged decadence began. Statistics compiled by Asdrúbal Baptista and data provided by the Central Bank of Venezuela show that the purchasing power of the average salary of 2011 is the same as in 1966. The 45 years of stagnation are the result of atrophied productivity. (El Universal, 05-05-2012; http://www.eluniversal.com/economia/120505/purchasing-power-in-venezuela-is-the-same-as-back-in-1966)

Venezuela: a country with no rules

In Venezuela, the time needed to register a company, or obtain the document that establishes a person as a property owner may take up to four months, but only if one is lucky. In more complex operations one can wait up to six months, and go through myriad steps, plus the discretionary power of any official. This is not only an issue of efficiency, but has become a system that paralyzes Venezuela's economy and encourages many entrepreneurs to take the route of the informal economy in order to avoid complications. (El Universal, 05-05-2012; http://www.eluniversal.com/nacional-y-politica/120505/venezuela-a-country-with-no-rules)

Venezuela is among the 12 countries included in the priority watch list for Intellectual Property Right (IPR) violations, according to a report of the United States Department of Commerce. The study -which is known as 301 Report- placed Venezuela on the "black list" for one more year. (El Universal, 05-07-2012; http://www.eluniversal.com/economia/120507/venezuela-among-countries-with-high-piracy-levels)

Food shortages at 22%

The general food supply shortage index compiled by DATANALISIS continued at 22% at the close of April. More in Spanish: (Últimas Noticias, 05-07-2012; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/escasez-de-alimentos-se-mantiene-en-22-.aspx)

Commodities

BAUXILUM operating at critical level

CVG BAUXILUM which produces bauxite and alumina has reached an extremely critical operating and financial stage which jeopardizes primary aluminum production and its transformation. The company operates a single phase at 50% of installed capacity. In April it produced 65,000 tons of alumina, out of an average 120,000. That is vital to producing aluminum. Director Wilfredo Flores says "if this situation continues... we are endangering national aluminum production and thousands of jobs". He called upon the Government to review these companies that "are about to shut down". More in Spanish: (El Universal, 05-08-2012; http://www.eluniversal.com/economia/120508/bauxilum-se-encuentra-operando-en-niveles-criticos)

CVG VENALUM has a new president amid operating crisis

Vice President Elias Jaua announced that Francisco Diaz will be the new president in charge of the state company CVG VENALUM aluminum. Díaz will take over a severe operating crisis as the company is operating at 24.4% capacity. More in Spanish: (Tal Cual, 05-07-2012; http://www.talcualdigital.com/index.html; El Universal, 05-08-2012; http://www.eluniversal.com/economia/120508/crisis-operativa-actual-recibe-a-presidente-de-venalum)

International Trade

Colombia-Venezuela cross-border trade faces difficulties

Although the governments of Venezuela and Colombia have signed several agreements, bilateral trade "has failed to take a turn leading to improve the situation that deteriorated after the severance of commercial relations in 2009." In its 2011-2012 report, the Venezuelan-Colombian Chamber for Economic Integration (CAVECOL) says that "except for some cases, difficulties grow day by day" on the border. (El Universal, 05-07-2012; http://www.eluniversal.com/economia/120507/colombia-venezuela-cross-border-trade-faces-difficulties)

Politics

Chavez phones to say he will soon return to campaign,  and "build more socialism" in 2013-2019

He made the statement in a telephone call from Havana to a government radio show in Caracas, adding that he has been working constantly and will use the 2013-2019 to continue "building socialism" and further "empower the Venezuelan people." More in Spanish: (El Universal, 05-08-2012; http://www.eluniversal.com/nacional-y-politica/120508/presidente-dice-que-regresara-pronto-para-incorporarse-a-la-campana; AVN; http://www.avn.info.ve/contenido/chávez-destaca-que-construcción-del-socialismo-se-afinará-periodo-gobierno-2013-2019)

Venezuela insists Chavez still leading as silence reigns

Allies of Venezuela's ailing President Hugo Chavez had insisted he was still leading the nation despite a week of silence from the usually loquacious leader whose battle with cancer has overshadowed his reelection bid. Chavez's normally ubiquitous media presence has slowed to a trickle of Tweets. He had not made any live contact with state media in the week since a public appearance last Monday before leaving for Cuba to receive treatment. (Reuters, 05-07-2012; http://www.reuters.com/article/2012/05/07/us-venezuela-chavez-idUSBRE8460N020120507)

Chavez congratulated France's president-elect Hollande

President Hugo Chavez congratulated François Hollande, who was elected President of France after a second round of the electoral process Sunday. (AVN, 05-07-2012; http://www.avn.info.ve/contenido/chavez-congratulates-france039s-president-elect-hollande)

Venezuela experiences its first mass migration

Information from the World Bank shows that an estimated 521,620 Venezuelans have left the country, and a researcher at Catholic University, Anitza Freites, says migration has increased since 2000. The nation was traditionally a receiver nation. The main destination of Venezuelan migrants is the United States, followed by Spain. More in Spanish: (Ultimas Noticias; http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/el-pais-vive-su-primera-migracion-masiva.aspx)

Caricom supports Guyana to Venezuela

The countries of the Caribbean Community described as unfortunate the objection raised by Venezuela to Guyana's request to extend the outer limits of its shelf beyond 200 nautical miles within the UN Commission on the Limits of the Continental Shelf. A meeting of CARICOM foreign ministers held in Suriname on 3 and 4 May reiterated its historical support for Guyana, declaring that there is no territorial dispute between the two countries since boundaries were set in an 1899 Arbitral Award. Caracas has objected to this premise for decades on the grounds that the arbitration decision is null and void. More in Spanish: (El Nacional, 05-07-2012; http://www.el-nacional.com/)




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.