Venezuelan Daily Brief

Published in association with The DVA Group and The Selinger Group, the Venezuelan Daily Brief provides bi-weekly summaries of key news items affecting bulk commodities and the general business environment in Venezuela.

Friday, December 12, 2014

December 12, 2014

International Trade


Cargo that has arrived at Puerto Cabello:

  • Over 6,000 tons of aromatic tar from Isla Refinery in Curazao for PDVSA
  • Over 1,000 tons of auto parts from Ica Automóviles for Corporación ZGT
  • 992 tons of semolina pasta from Sumesa for CASA
  • Over 549 tons of spaghetti from Multlu Makarinacilik
  • Over 530 tons of frozen beef from Sertrading. 
  • Over 300 tons of fireworks from Liyuang Rising Fireworks for Pirotécnica Primium
  • Over 40 tons of Christmas cake with chocolate chips from Nestlé Perú for Corporación Venezolana de Comercio
A total of 19 ships are at bay in Puerto Cabello awaiting dock assignment to unload. There are 7 ships bearing bulk cargo, two with corn for CASA. More in Spanish: (Notitarde;; Notitarde;


Port services payment to conform to international exchange rates

All local port dues will henceforth be paid for in bolívars at the international parity established in US dollars at the time the service is performed. More in Spanish: (El Universal;



Logistics & Transport


IATA asks Venezuelan government to honor US$ 3.6 billion debt to airlines

Tony Tyler, Executive Director of the International Air Transport Agency (IATA), has asked the Venezuelan government to authorize repatriation of US$ 3.6 billion it owes international carriers. He said relations between the Venezuelan government and the industry are the worst in the entire world. "The government is slow to return these funds, it does so with large discounts, and has a poor record on keeping promises", he said. More in Spanish: (El Universal,; El Mundo,



Oil & Energy


Maduro: Venezuelan oil barrel down to US$ 58

The Venezuelan oil basket plummeted to US$ 58 per barrel, says President Nicolás Maduro. The price dropped US$ 2.55 below the last figure released by the Venezuelan president on December 9 (US$ 60.55). Maduro accused the United States of generating an oil production strategy in order "to hit" Russia, Iran, and Venezuela. "The oil and gas they have been producing has flooded the international market to hit the Russian economy (...), Iran, and us, Venezuela," Maduro remarked. (El Universal,


Saudi Oil Minister Naimi: 'Why should we cut production?'

Saudi Oil Minister Ali al-Naimi has shrugged off suggestions that the world's biggest crude exporter might cut production to reverse the deepest price slump in years, saying the kingdom's output had remained steady through last month. Naimi's comments on the sidelines of an annual U.N. climate change conference in Lima, Peru, stuck to the message he laid out at OPEC's meeting two weeks ago: The market would be left to balance itself without the kingdom's intervention. That stance was seen as a shift from longstanding Saudi policy to act as a swing supplier. Oil prices have dropped US$ 13 a barrel since that November meeting. Yet asked on Wednesday whether he thought it would be necessary to reduce oil production prior to OPEC's next scheduled meeting in June, Naimi responded: "Why should we cut production? Why?" (Reuters,


PDVSA chief claims shale oil is a political weapon that is the US uses to control nations

PDVSA President Eulogio Del Pino has said the US uses shale oil extraction as a political weapon to weaken the economy of sovereign nations, and adds: "This US practice is bringing on a real environmental disaster".  More in Spanish: (PDVSA,; Agencia Venezolana de Noticias;ítica)



Economy & Finance


Venezuela default odds at 93% as bonds sink to 16-year low

Swaps traders are almost certain that Venezuela will default as the rout in oil prices pressures government finances and sends bond prices to a 16-year low. Benchmark notes due 2027 dropped to 43.75 cents on the dollar as of 11:35 a.m. in New York, the lowest since September 1998, as crude extended a bear market decline. The upfront cost of contracts to insure Venezuelan debt against non-payment for five years is at 59%, bringing the implied probability of default to 93%, the highest in the world. This year’s 38% plunge in oil prices has exacerbated concern that Venezuela is running out of dollars needed to pay debt, pushing bond prices to levels investors haven’t seen since the 1998 Russian financial crisis spurred a selloff in emerging markets. “It’s very hard to think of a new marginal buyer for Venezuelan debt,” says Mohammed Grimeh, head of financial markets at Standard Chartered. “The hedge funds aren’t buying it, and the dealers aren’t taking risk.” Benchmark bonds fell 0.63 cent on the dollar today, extending the drop over the past week to 8.3 cents and pushing yields to 23%. At US$ 21.5 billion, the nation’s reserves are at their lowest levels in a decade and cover only about 40% of total debt due over the next five years. The economy is expected to shrink 3% this year and another 1.5% in 2015, according to the median estimate of 15 analysts surveyed by Bloomberg. Barring any increases in crude output or cuts in imported goods, Venezuela will need oil to average about US$ 97 per barrel to meet its debt obligations through 2038, according to Daniel Chodos, an analyst at Credit Suisse Group AG. The drop in oil will cause the nation’s trade balance to fall into a deficit of 2% of gross domestic product next year, according to Moody’s Analytics. That will “make the country even more reliant on scarce capital inflows to cover the deficit and maintain its ability to service foreign-currency debt,” Moody’s wrote in a Dec. 8 report. Venezuela is rated seven levels below investment grade at Caa1 by Moody’s Investors Service.  The bus is going downhill, and it doesn’t have brakes,” says Ray Zucaro, who helps oversee about US$ 450 million at SW Asset Management. (Bloomberg,


Venezuela bond prices at all-time low               

Venezuelan bond prices hit all-time lows on Tuesday as slumping crude prices fanned concerns about the oil-exporting country's ability to honor its sovereign debt obligations. The recent oil slide has been the last straw in Venezuela's growing economic crisis, which has already caused the local currency to lose nearly 40% of its value in the parallel market during the past three months.  "The recent fall in oil prices appears to have accelerated what had already started to look like a currency crisis" in Venezuela, David Rees, emerging markets economist with London-based Capital Economics, wrote in a research note.  "A default on foreign currency debt is a key risk in the next two years," Rees added. The cost of insuring against a Venezuelan debt default jumped to an all-time high, with five-year credit default swaps  trading near 3,300 basis points.  Venezuela's benchmark global bond due in 2027 plunged more than US$ 2 in price to US$ 48.646, driving its yield to an all-time high of 20.887%. (Reuters,


Moody’s said Venezuela’s risk of default increases due to falling oil prices. The ratings agency says Venezuela faces a serious fiscal deficit and high public spending. If the barrel of crude stabilizes at US$ 60/bbl., this would considerably increase the risk of default for a country that already has “trash bonds” ratings, according to Moody’s. (Veneconomy,; El Universal,


2015 national budget based on US$ 60 per barrel

The 2015 Budget Law just passed by the National Assembly is set at VEB 741.708 billion, an increase of 34.7% over this year, and is based the premise that oil income will be priced at US$ 60 per barrel.  The 2015 budget would be 21.6% of estimated GDP. It projects inflation between 25-30%, growth in GDP at 3%., a fiscal deficit of 3% and no change in the exchange rate. More in Spanish: (El Mundo,; El Universal,; Ultimas Noticias,; El Nacional,


Additional credits soar 106% above 2013

Labor liabilities and gaps in official bodies have pushed the Venezuelan government to request additional credits; and spending has grown 106% this year from 2013. Figures provided by the National Assembly show that through this week, extraordinary operations approved throughout 2014 totaled VEB 565 billion (US$ 89.68 billion), while in 2013, additional credits amounted to VEB 274 billion (US$ 43.49 billion). The amount of additional credits approved by the parliament exceeds the original budged calculated for this year, which stood at VEB 552.6 billion (US$ 87.71 billion). (El Universal,


Nicolás Maduro says his government guarantees the necessary funds to develop strategic projects and social programs included in the 2015 Budget, even with falling oil prices in the international markets. He reported Venezuela’s export barrel closed at US$ 58/bbl. on Tuesday (...) “and it’s there fluctuating. We are doing everything so the barrel rebounds to the price it should,” he said. (Veneconomy,


Venezuela to implement countercyclical plan to face oil fall

In light of sliding oil prices, President Nicolás Maduro pointed out the need to adopt a countercyclical plan. Given the drop in oil revenues, the president said sumptuary expenditure has been cut down by 20%. (El Universal,



Politics and International Affairs


U.S. moves to penalize Venezuelan officials, Obama plans to sign Venezuela sanctions legislation

The U.S. government moved closer to hardening sanctions on Venezuelan officials for alleged human rights abuses. The Senate and the House of Representatives have voted to freeze the bank accounts and assets and decline visas to Venezuelan officials allegedly involved in a violent crackdown this year on Venezuelan protesters in which 43 people were killed. In Caracas, President Nicolás Maduro reacted angrily to the bill. "Outrage and condemnation is what we feel towards the White House," He accused U.S. officials of "interfering" in Venezuelan affairs. "We don't accept insolent, imperialist sanctions. We are the children of Chávez," he said, referring to his mentor and predecessor, the late president Hugo Chávez. President Barack Obama plans to sign legislation that would impose sanctions on Venezuelan government officials found to have violated protesters' rights during demonstrations earlier this year, the White House said on Thursday. The measure would deny visas and freeze assets of officials involved in what the law considers a crackdown on political opponents during three months of street protests in Venezuela over crime and the economy that left 43 dead. If the bill becomes law, it would raise the stakes on existing Obama administration sanctions. In July, the State Department placed about two dozen unidentified Venezuelans on a visa blacklist for alleged human rights abuses. International human rights organizations said Venezuelan security and paramilitary forces brutally repressed the demonstrators during the protests this year. Moises Naim, an analyst at the Carnegie Endowment for International Peace, said the sanctions could raise pressure on the so-called Boligarchs--rich, allegedly corrupt government supporters. "This could make life harder for them since they are intensive users of the international financial system," he said. (Nasdaq,; Reuters,;; Veneconomy,; El Universal,; BBC News,


Prosecutor General blasts US attempt at sanctions

For deeming it a "threat against national sovereignty," Venezuela's Prosecutor General Luisa Ortega Díaz slammed a bill approved by the US Congress to impose sanctions on Venezuelan government officials accused of human rights abuses. "We know nothing about the facts, what is the procedure, where is it established, who authorized the United States to commence such proceeding, for they, particularly the US Department of State, are the main human rights abusers not only in the world, but also in their own territory," said Ortega Díaz on Wednesday, after applying for reelection. Ortega, herself, is on the list of officials to be sanctioned for violating human rights. The governments within the Bolivarian Alliance of the People of Our America (ALBA) have "firmly" rejected the sanctions proposed. (El Universal,;


Mandela's lawyer to fight for López' freedom

Former Canadian Justice Minister Irwin Cotler, who was an attorney for the late Nelson Mandela, has vowed to fight for the freedom of Venezuela's jailed opposition leader Leopoldo López. He says: "López, along with Biram Dah Abeid (Mauritania) and Hossein Kazamani Boroujerdi (Irán), embody the spirit of Mandela, they are heroes in their own right". More in Spanish: (El Nacional;


Latin America is one of the deadliest zones, with Venezuela, Honduras and Colombia, leading, according to a report from the World Health Organization (WHO), Homicide is the fourth cause of death among individuals aged 15 to 44. In Venezuela, the rate is 57.6 homicides per every 100,000 inhabitants. The rate for Colombia and Honduras is 43.9 and a world record 103.9, respectively. The Department of State has issued this Travel Warning to U.S. citizens on Venezuela: "Violent crime in Venezuela is pervasive both in the capital, Caracas, and in the interior. According to the non-governmental organization Venezuelan Violence Observatory (VVO), there were 24,763 homicides in Venezuela in 2013, amounting to a rate of 79 homicides per 100,000 inhabitants, among the highest in the world. In Caracas, the homicide rate is even higher at 134 homicides per 100,000 inhabitants. Kidnappings are also a serious concern throughout the country. In 2013, 625 kidnappings were reported to the authorities, and it is estimated that roughly 80% of kidnappings go unreported. Common criminals are increasingly involved in kidnappings and may deal with victims’ families directly. In addition, there is cross-border violence, kidnappings, drug trafficking, and smuggling along Venezuela’s western border...Motorists should avoid traveling at night and always drive with their doors locked to deter potential robberies at traffic lights and on congested city streets. (Veneconomy,; and



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.

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