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
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; http://www.eluniversal.com/economia/141210/ajustan-pago-de-tasas-portuarias-al-cambio-vigente)
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, http://www.eluniversal.com/economia/141211/piden-al-gobierno-repatriar-3600-millones-a-aerolineas; El Mundo, http://www.elmundo.com.ve/noticias/economia/empresas/iata--relacion-entre-el-gobierno-venezolano-y-aero.aspx)
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, http://www.eluniversal.com/economia/141211/maduro-venezuelan-oil-barrel-down-to-usd-58)
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, http://www.reuters.com/article/2014/12/11/us-oil-naimi-idUSKBN0JP04720141211)
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, http://www.pdvsa.com/;
Agencia Venezolana de Noticias; http://www.avn.info.ve/contenido/analistas-alertan-sobre-planes-imperialistas-para-usar-fracking-como-arma-geopolítica)
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, http://www.bloomberg.com/news/2014-12-11/venezuela-default-odds-at-94-as-bonds-sink-to-lowest-since-98.html)
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, http://www.reuters.com/article/2014/12/09/markets-emerging-idUSL1N0TT1NS20141209)
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, http://www.veneconomy.com/site/index.asp?ids=44&idt=42238&idc=2;
El Universal, http://www.eluniversal.com/economia/141211/moodys-venezuela-russia-could-lose-the-most-from-falling-oil-prices)
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, http://www.elmundo.com.ve/noticias/economia/parlamento/presupuesto-2015-mantiene-premisa-de-petroleo-a--6.aspx#ixzz3LUQCKERa;
El Universal, http://www.eluniversal.com/economia/141210/an-aprobo-presupuesto-de-2015-por-bs-7417-millardos;
Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/aprobado-proyecto-de-ley-de-presupuesto-2015.aspx;
El Nacional, http://www.el-nacional.com/economia/AN-aprobo-Ley-Presupuesto_0_534546622.html)
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, http://www.eluniversal.com/economia/141211/additional-credits-soar-106-from-2013)
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,
http://www.veneconomy.com/site/index.asp?ids=44&idt=42237&idc=2)
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, http://www.eluniversal.com/economia/141211/venezuela-to-implement-countercyclical-plan-to-face-oil-fall)
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, http://www.nasdaq.com/article/us-moves-to-penalize-venezuelan-officials-20141209-01247?utm_source=Sailthru&utm_medium=email&utm_term=%2AMorning%20Brief&utm_campaign=2014_MorningBrief%20-%20UAE121014;
Reuters, http://www.reuters.com/article/2014/12/11/usa-venezuela-obama-idUSL1N0TV21I20141211;
http://www.reuters.com/article/2014/12/11/us-venezuela-usa-sanctions-idUSKBN0JP00W20141211;
Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=42240&idc=1;
El Universal, http://www.eluniversal.com/nacional-y-politica/141211/us-congress-approves-sanctions-on-venezuelan-officials;
BBC News, http://www.bbc.com/news/world-latin-america-30416429)
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, http://www.eluniversal.com/nacional-y-politica/141211/attorney-general-blasts-us-attempt-at-sanctions; http://www.eluniversal.com/nacional-y-politica/141212/alba-respaldara-a-venezuela-ante-posibles-sanciones)
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; http://www.el-nacional.com/)
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, http://www.veneconomy.com/site/index.asp?ids=44&idt=42225&idc=1;
and http://travel.state.gov/content/passports/english/alertswarnings/venezuela-travel-warning.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.
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