September 19, 2014

International Trade

New cargo arrivals reported at Puerto Cabello

• 681 tons of beef from Brazil, for state agency CASA and others.
• 538 tons of wheat flour, for CASA
• 490 tons of long lasting PARMALAT milk from their Uruguay operation,
• Over 306 tons of margarine, for CASA
• 284 tons of chicken, for CASA
• 265 tons of spaghetti, for CASA
• Also auto parts, motorcycles and electronic material.

More in Spanish: (Notitarde; http://www.notitarde.com/La-Costa/Al-puerto-local-llego-carne-pollo-margarina-leche-y-harina-de-trigo-2236311/2014/09/18/354001)

MAERSK sells Venezuela cargo boat business

Danish shipping conglomerate A.P. Moller-Maersk has announced the sale of its cargo boat business in Venezuela, saying it is a "minor part" of its business. The unit is made up of 10 cargo boats under contract in Lake Maracaibo. More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/maersk-vende-negocio-de-cargueros-en-venezuela.aspx#ixzz3DZNZjQ5a)

Oil & Energy

Barclay's estimates CITGO value at US$7-9 billion

Barclays Capital estimates the value of CITGO somewhere between US$ 7-8 billion, despite the fact that other firms indicate its value could be at US$ 10 billion. More in Spanish: (El Universal; http://www.eluniversal.com/economia/140919/calculan-que-citgo-tiene-un-valor-entre-7-y-9-millardos; El Nacional, http://www.el-nacional.com/economia/Barclays-valora-Citgo-millardos_0_485351624.html)

Sale of CITGO causes PDVSA default insurance to increase

Five-year bond insurance contracts known as credit default swaps (CDS) on Venezuela's state oil company Petroleos de Venezuela S.A. (PDVSA) widened 16% over the past week, according to international ratings agency Fitch.

PDVSA CDSs widened 31% during the past month, significantly underperforming Fitch Solutions' Global Oil & Gas CDS Index, which had firmed 5% during the same period. The one- and five-year CDSs referencing PDVSA have inverted, indicating that the market is pricing in higher credit risk at the shorter end of the curve. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2352442&CategoryId=10717)

'Zombie' Hovensa refinery could live again due to shale

The mothballed Hovensa refinery, once the largest in the Western hemisphere, could be the latest "zombie refinery" to come back to life, revived by the U.S. shale boom. Hess Corp and Venezuela's state-run Petroleos de Venezuela (PDVSA) have found an interested buyer for their 350,000 barrel per day (bpd) Hovensa refinery in the Virgin Islands, sources close to the deal told Reuters, confirming a local news report that said the plant would use U.S. crude. Refining at the plant has been halted since 2012, but its owners have been using it as a terminal. The Virgin Islands government has sought a buyer who will return the plant to its former status as an active refinery. (Reuters, http://www.reuters.com/article/2014/09/18/us-refinery-hovensa-restart-analysis-idUSKBN0HD0B520140918; http://www.reuters.com/article/2014/09/17/refinery-hovensa-sale-idUSL1N0RI1CR20140917; El Universal, http://www.eluniversal.com/economia/140918/hess-pdvsa-find-potential-buyer-for-refinery-in-the-virgin-islands)

Commodities

Mitsubishi halts Venezuela plant due to imports snag -union

The assembly plant for Mitsubishi autos in Venezuela has halted operations due to a delay in the import of parts for assembly, a union official said. Like other private businesses here, carmakers have been complaining that the socialist government's complicated currency controls and bureaucratic processes are slowing imports of essential products. The assembler of Mitsubishi in Venezuela, MMC Automotriz, which belongs to Japan's Sojitz Corporation, began a month-long stoppage on Monday, says union official Jahaziel Bolivar. "We're waiting for materials to arrive," he said, adding that they were held up at a port in western Venezuela. (Reuters, http://www.reuters.com/article/2014/09/17/venezuela-autos-idUSL1N0R61NL20140917)

Economy & Finance

Venezuelan bonds slide after S&P lowered credit rating

Venezuela’s bonds sank to a 17-month low after Standard & Poor’s lowered the country’s credit rating, citing an economic slowdown and soaring inflation. The nation’s benchmark dollar bonds due 2027 slid 4.23 cents to 68.85 cents on the dollar today, the lowest since April 2013, after S&P cut Venezuela’s long-term rating by one step to CCC+, seven levels below investment grade and just one notch above war-torn Ukraine, and said the outlook is negative. “These guys are operating on fumes,” says Marco Santamaria, a money manager at Alliance Bernstein LP, which has reduced its holdings of Venezuelan bonds in recent months, “I think the situation’s quite grim.” S&P says Venezuela’s economy will contract 3.5% this year after growing 1% in 2013. Annual inflation accelerated to 63.4% in August, the fastest since 1997 and the highest among countries tracked by Bloomberg.  “The downgrade is based on continued economic deterioration, including rising inflation and falling external liquidity, and the declining likelihood that the government will implement timely corrective steps to staunch it,” S&P analyst Sebastian Briozzo said in the statement. “The government could come under greater strain to service its rising level of external debt.” S&P’s rating is in line with the Caa1 ranking from Moody’s Investors Service, which cut Venezuela’s grade in December. (Bloomberg, http://www.bloomberg.com/news/2014-09-16/venezuela-s-rating-cut-by-s-p-to-ccc-on-deteriorating-economy.html)

Default naysayers undermined by S&P downgrade

Standard & Poor’s is undoing the efforts of banks from Goldman Sachs Group Inc. to BNP Paribas SA to quell concern that Venezuela will default. (Bloomberg, http://www.bloomberg.com/news/2014-09-18/venezuela-default-naysayers-undermined-by-s-p-cut-andes-credit.html; http://www.bloomberg.com/news/2014-09-16/venezuela-s-rating-cut-by-s-p-to-ccc-on-deteriorating-economy.html; Reuters, http://www.reuters.com/article/2014/09/17/venezuela-economy-idUSL1N0RI16A20140917)

Declining gold price increases Venezuela's reserve contraction

73% of Venezuelan international reserves are held in gold, which has dropped down to US$ 1216 an ounce, its lowest price since January 2nd. The Central Bank valued gold reserves at US$ 15.240 billion on August 7th, a 24% drop from December 2012. More in Spanish: (El Universal, http://www.eluniversal.com/economia/140919/declive-del-oro-amenaza-con-agravar-caida-de-las-reservas)

Government expenditures have risen 150% above 2013

According to reports presented to the National Assembly, in almost nine months the legislature has authorized an additional VEB 313.2 billion for extraordinary expenses, which is 150% more than approved during the same time frame in 2013.  More in Spanish: (El Universal, http://www.eluniversal.com/economia/140917/150-sube-el-gasto-adicional-del-gobierno-respecto-a-2013)

FOREX allocation will contract during the last quarter of this year as public imports continue increasing, says economist Jesús Casique. He explains it is extremely difficult for the country’s productive sector to acquire dollars and at an overvalued exchange rate of VEB 11.70/US$1 (SICAD I), and demand will be infinite. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=41120&idc=2)

Politics

Maduro orders investigation into international media reporting virus in Aragua state

President Nicolás Maduro says media outlets CNN en español, NTN24, and the Miami Herald have launched an international campaign claiming "the state of Aragua had been hit by a virus that had killed thousands of Venezuelans in recent hours at Maracay (Central) Hospital, and that it was unknown whether Ebola was the virus involved."

Maduro claimed the reports intended to cause "panic or psychological terror." Fever cases notified to the Venezuelan Health Ministry have almost quadrupled from last year’s August. Only in the 32nd epidemiologic week 50,442 cases were reported, Venezuelan Society of Infect logy issued a press release in which they pointed out “an exponential increase in the number of cases of fever ailments in recent weeks have been unleashed without any concrete explanation as to the cause.” (El Universal, http://www.eluniversal.com/nacional-y-politica/140918/maduro-orders-investigation-into-media-reporting-virus-in-aragua-state; http://www.eluniversal.com/nacional-y-politica/140918/president-maduro-to-produce-evidence-of-psychological-war-in-venezuela; Bloomberg. http://www.bloomberg.com/news/2014-09-18/maduro-orders-media-probe-saying-cnn-causing-alarm.html; Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=41116&idc=3; http://www.veneconomy.com/site/index.asp?ids=44&idt=41115&idc=3; El Universal, http://www.eluniversal.com/nacional-y-politica/140918/maracays-central-hospital-under-epidemiologic-surveillance)

Venezuelan cartoonist says fired for health satire

A Venezuelan cartoonist said she was fired from her newspaper for a caricature that used the late socialist leader Hugo Chavez's signature to satirize the state of healthcare. "I was informed of my sacking from El Universal over this caricature and my awkward attitude over graphic satire," veteran cartoonist Rayma Suprani said via Twitter. There was no confirmation from the newspaper. The cartoon, which ran on El Universal's editorial page on Wednesday, showed a normal-looking electrocardiogram under the heading "health" with another one merging Chavez's signature into a flat-lining heartbeat line under a title "health in Venezuela." (Reuters, http://www.reuters.com/article/2014/09/18/us-venezuela-cartoonist-idUSKBN0HD1MF20140918; Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=41123&idc=1)

Government seeks to revoke actress María Conchita Alonso's nationality

Venezuela’s Internal Affairs, Justice and Peace Ministry began procedures to revoke the Venezuelan nationality of actress and singer María Conchita Alonso. Minister Miguel Rodríguez Torres appointed attorney Douglas Camero to file such a motion before the corresponding judicial bodies for alleged treason, claiming Alonso asked American President Barak Obama’s intervention in Venezuela. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=41122&idc=1; El Universal, http://www.eluniversal.com/nacional-y-politica/140918/venezuela-to-revoke-citizenship-of-actress-maria-conchita-alonso)

Colombia's NTN24 reports Venezuela blocks its' web page

Colombian international news channel NTN24 reports that its' web page was blocked by Venezuela starting last Tuesday, with no prior notice. Johnattan Bilancieri, director for Digital Platforms at NTN24 says: "The level of sophistication of this form of censorship reflects the viciousness of the Venezuelan regime against freedom of expression and its resolve to restrict the right of Venezuelans to be informed". Colombia's Foreign Ministry says it "hopes the problems...in some regions of Venezuela...is due to technical problems and not...censorship through technological blocking". More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/140919/ntn24-denuncia-que-fue-bloqueada-en-venezuela-su-pagina-web)

Venezuelan and Colombian FMs to meet in the US next week on border closing

Colombia's Foreign Minister María Angela Holguín announced that she will meet in New York with her Venezuelan counterpart, Rafael Ramírez in the context of the United Nations (UN) General Assembly. They intend to evaluate the issue of border smuggling, and also to express "diplomatically our disagreement with the border closure". President Nicolás Maduro ordered on August 11 the closure of the Colombia-Venezuela border on a daily basis, including a military deployment, from 10 pm to 5 am. Colombia is the main market for Venezuelan food, basic goods, and fuel sold at the border in Venezuela. (El Universal, http://www.eluniversal.com/nacional-y-politica/140918/venezuelan-and-colombian-fms-to-meet-in-the-us-next-week)

Venezuelan protesters appear to discuss explosives in video

Two Venezuelan activists recently deported by Colombia have surfaced in a video that purportedly shows them discussing plans to stockpile weapons and launch attacks on government targets in apparent attempt to destabilize President Nicolas Maduro’s rule. The video, which aired on a TV program known for battering the government’s foes, apparently contains excerpts from a Skype video conference Lorent Saleh and Gabriel Valles had with an unidentified third person, whose voice is distorted. It’s not clear when the recording took place or how it was obtained. Its veracity could not be independently confirmed, but in it the two students, apparently speaking from inside Colombia, freely boast of all sorts of covert plans. (The Washington Post)

Venezuelan FM rejects recent US report on drugs

The Venezuelan government refuted "conclusively" a drug report released on Monday by US President Barack Obama, whereby Venezuela is accused of not fulfilling its international commitments to counter-narcotics efforts. Venezuela "rejects conclusively a report on drugs issued by the US government on Monday, August 15," the Venezuelan Foreign Office said in a press release where Washington is accused of "meddling" in the country internal affairs. (El Universal, http://www.eluniversal.com/nacional-y-politica/140918/venezuelan-fm-refuses-recent-us-report-on-drugs)

Milwaukee man gets 7 years for selling military parts to Venezuela

A former Milwaukee man will spend the next seven years in prison for conspiring to sell parts for a military fighter jet to the Venezuelan Air Force. Ronald Dobek was sentenced last week following his conviction in a trial by a jury which found him guilty on all three counts of the indictment that charged him with conspiring to violate U.S. export laws and unlawfully exporting F-16 parts to Venezuela in December 2007 and December 2008. According to the indictment, Dobek sent F-16 canopy seals to Venezuela, in violation of federal law. (Milwaukee Journal Sentinel, http://www.jsonline.com/news/crime/ex-milwaukee-man-gets-7-years-for-selling-military-parts-to-venezuela-b99352702z1-275309231.html)

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.