Economics &
Finance
Government priorities trump currency
allocation
Even though the Ministry of Petroleum and Mining reports
on a weekly basis that the Venezuelan oil basket is sold at prices in excess of
USD 100 per barrel, the market is subject to changes in the allocation of
currency by the official sector. Last April 20, the president of the Currency
Administration Commission (Cadivi), Manuel Barroso, explained certain aspects
about the new currency allocation priorities for eight academic areas.
He pointed out that, based on the Millennium Goals and
the Socialist Plan for the Nation, the government set academic priorities
benefiting from the exchange rate of Bs 4.3 per US dollar. He clarified that
this move does not mean that anyone desiring to study other areas may not have
access to currency as there are other options, like the Transaction System for
Foreign Currency Denominated Securities (Sitme), which involves the purchase of
bonds at an exchange rate of Bs 5.3 per US. The medicine sector was also
notified of the "temporary" measure for priority allocation of
currency for 121 active principles over any other of its kind, according to
members of that sector. (El Universal,
04-28-2012; http://www.eluniversal.com/economia/120428/government-priorities-trump-currency-allocation)
Fitch says opaque off-budget
spending weighs on Venezuela's creditworthiness
According to a special report published today by Fitch
Ratings, the growth in off-budget spending has decreased the transparency of
Venezuela's public and external accounts and increased their discretionary
character. Information on these funds' balances, quality of investments and
cash flows is limited, thus increasing the challenges to assess the sovereign's
actual financial strengths and vulnerabilities. In addition, 'the policy choice of transferring an
increasing share of the oil windfall to opaque and highly discretionary
mechanisms has resulted in a visible deterioration in Venezuela's external and
fiscal credit metrics in spite of exceptional oil prices,' said Erich
Arispe, Director in Fitch's Latin America Sovereigns Group. (Reuters,
04-30-2012; http://www.reuters.com/article/2012/04/30/idUSWNA614720120430)
PDVSA bond rally sends yield on 2015
note to record low
The yield on Petróleos de Venezuela SA bonds due in 2015
fell to the lowest since being issued in 2009 amid a rally in Venezuelan
assets. The yield on the 5% bonds due in 2015 fell 53 basis points, or 0.53
percentage point, to 10.27% at 1:22 p.m. in Caracas, according to data compiled
by Bloomberg. The bond’s price rose 1.38 cents to 84.86 cents on the dollar.
The bonds are attractive because there’s little risk additional supply will
create a glut, Raymond Zucaro, who helps manage about U$D230 million of
emerging-market corporate debt at SW Asset Management LLC, said in a phone interview.
(Bloomberg, 04-27-2012; http://www.bloomberg.com/news/2012-04-27/pdvsa-2015-bond-rally-sends-yields-to-record-low-caracas-mover.html)
Government authorizes USD 1.63
billion agricultural bond issue
The National Superintendence of Securities authorized an
agricultural bond issue by the National Development Fund (Fonden) amounting to
VEB 7 billion (USD 1.63 billion, at the official exchange rate of VEB 4.30 per
US dollar).
The financial regulation agency said that the debt
instruments will be due in 2015, 2016 and 2017, whereas the coupon of the bonds
will be about 70% of the interest rate set for agricultural transactions.
The bonds will be purchased by the Venezuelan banks. In
turn, the banks will provide funds for the agricultural portfolio. (El Universal, 04-30-2012; http://www.eluniversal.com/economia/120430/government-authorizes-usd-163-billion-agricultural-bond-issue)
Commodities
PDVSA and Chinese SINOHYDRO signed a framework cooperation agreement
for the building of an industrial complex at the Carabobo area in the Orinoco
Oil Belt, says the oil State company in a press release. The investments
estimated for this oil and services complex have been estimated in U$D 4.5
billion. (Veneconomy, 04-30-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=30303&idc=4)
Catalytic cracking unit at Amuay
restarted, PDSVA Says
Petróleos de Venezuela, S.A., the state oil company,
restarted the catalytic cracking unit at the Amuay refinery in Falcon state
following maintenance work that began in February, the company said today in an
e-mailed statement.
The company also restarted treatment plants connected to
the unit, which processes 108,000 barrels of oil a day and 64,000 barrels a day
of gasoline, according to the statement. A catalytic unit at Amuay refinery
broke down after attempts to restart an air compressor following programmed
maintenance, Caracas-based newspaper El Universal reported April 26, citing
union leader Ivan Freites. (Bloomberg, 04-28-2012; http://www.bloomberg.com/news/2012-04-28/catalytic-cracking-unit-at-amuay-restared-pdsva-says.html)
Reduced Venezuelan aluminum
production forces authorities to adjust exports
The decline in aluminum production in industries located
in the Guayana region has forced authorities to "adjust" aluminum
supply quotas sold to multinational companies. Aluminum smelter CVG ALCASA's
failure to deliver the product is long-standing and it is due to the industry's
operational decline. In the case of smelter VENALUM, exports were reduced
because of production has plummeted in recent weeks, and high levels of iron
have been found in aluminum cylinders. (El Universal, 04-30-2012; http://www.eluniversal.com/economia/120430/reduced-venezuelan-aluminum-production-forces-authorities-to-adjust-ex)
New power units operate
inefficiently
Igor Gavidia, head of the National Center for Electric
Power Delivery (CNDC), National Electricity Corporation (CORPOELEC), has admitted
that several "important units"
of the National Electricity System (SEN) have been hit by power failures. As a
result, there have been several power outages. Meanwhile, energy experts have
said that power generation in the northern region of the country does not meet
demand, because the megawatts added to the system have not worked as expected. (El Universal, 04-30-2012; http://www.eluniversal.com/economia/120430/new-power-units-operate-inefficiently; http://www.eluniversal.com/economia/120430/venezuelan-govt-confirms-failures-in-major-power-plants)
Sources report fall in fuel supply
in Caracas
The supply of gasoline in the Greater Caracas has been
affected by failures in the distribution of fuel by the National Transport
Company (ENT), industry sources reported. Gasoline deliveries have met not even
60% of total demand in gas stations, which amount to 290 gas pumps in Caracas
Metropolitan Area.
Sources said that under normal circumstances, there should be about 120
oil tank trucks loading fuel at the gas stations in Caracas. However, the
number of trucks is far lower. (El Universal, 04-30-2012; http://www.eluniversal.com/economia/120430/sources-report-fall-in-fuel-supply-in-caracas)
Logistics
& Transport
Slow operations saturate ports
The slow processes, limited availability of machinery to
mobilize cargo, limited yard capacity and the number of procedures involved in
releasing loads have caused a saturation of containers in the yards of Puerto
Cabello. Jorge Aroca, director of the Puerto Cabello Chamber of Commerce,
explains there is an adversary criteria by some authorities in verifying cargo.
More in Spanish: (Tal Cual, 04-30-2012; http://www.talcualdigital.com/index.html)
Politics
President Chavez enacted new Labor
Law
President Hugo Chavez has signed a new Organic Labor Law
to govern labor relations in Venezuela. (AVN, 04-30-2012; http://www.avn.info.ve/contenido/president-chavez-enact-new-labor-law-monday; El Universal, 04-30-2012 y
05-01-2012; http://www.eluniversal.com/economia/120501/retroactivity-of-severance-payment-should-be-estimated-since-1997;
http://www.eluniversal.com/economia/120430/new-venezuelan-labor-law-reduces-working-hours)
Chávez weighs Venezuela's pullout of
the IACHR
Venezuela's President Hugo Chávez disclosed the setup of
a State Council to ascertain in the possibility of leaving the Inter-American
Commission on Human Rights (IACHR).
"I will request the establishment of a State Council
to analyze this subject and I have asked Dr. José Vicente Rangel and Luis Brito
García to join it," the Head of State commented in an obligatory
simultaneous broadcast from Miraflores presidential palace. (El Universal, 04-30-2012; http://www.eluniversal.com/nacional-y-politica/120430/chavez-weighs-venezuelas-pullout-of-the-iachr)
Chavez back in Cuba for more cancer
treatment
President Hugo Chavez is on his sixth trip to Cuba this
year to continue his treatment for cancer ahead of elections in October,
fueling speculation his health is deteriorating. The National Assembly held an
emergency session to vote on whether to grant him leave to absent himself from
the country for more than five days. On previous occasions, Congress has voted
unanimously in favor; this time the opposition demanded that the Vicepresident
be named in the interim, and abstained as the majority voted permission. (Bloomberg, 04-30-2012; http://www.bloomberg.com/news/2012-04-30/chavez-seeks-permission-to-fly-to-cuba-for-more-cancer-treatment.html; AVN, 04-30-2012; http://www.avn.info.ve/contenido/parliament-discuss-chavez039s-permission-travel-cuba; El Universal, 05-01-2012; http://www.eluniversal.com/nacional-y-politica/120501/president-chavez-leaves-for-havana)
Guyana: Venezuela's position on
Guyana is "incongruous"
The submission presented by the Guyanese government to
extend the Caribbean country's continental shelf by 150 nautical miles was
discussed last week by the Guyanese Parliament. Guyanese Foreign Minister
Carolyn Rodrigues-Birkett referred to the objections that Venezuela has filed
with Ban Ki-moon, the Secretary General of the United Nations, related to
Guyana's submission to extend its continental shelf. "In September 2011, and indeed more recently, the government of
the Bolivarian Republic of Venezuela, declared its incongruous position on the
action taken by Guyana," the top diplomat said. (El Universal, 04-30-2012; http://www.eluniversal.com/nacional-y-politica/120430/guyana-venezuelas-position-on-guyana-is-incongruous)
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.
