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Venezuelan PDVSA Makes First Delayed Debt Payments

Oil

Venezuelan state-owned oil company PDVSA begun the process of making interest payments on four of its bonds, while suggesting that investors trust the company’s capacity to meet all debt payments, according to Reuters. PDVSA must complete a $135M coupon payment on Friday, and another $404M interest payment on Monday. The company’s bonds have already been declared in default in recent weeks, however investors have not yet taken any action against it.

Venezuela’s outstanding debts in a period of domestic financial crisis worsens the government’s position, which has been facing the dilemma of either continuing to pay its foreign debt at the expense of an increasingly hungry and sick population, or defaulting on creditors which would cripple the country’s access to financial markets and put PDVSA’s assets at risk.

The economic problems have also crippled the Venezuelan energy industry in the past two months. Venezuela’s oil output hit a 28-year low in October at 1.863M b/d, after falling by about 20K b/d per month since October 2016. Moreover, Venezuelan crude exports to the US in October stood at 541.13K b/d, the third lowest in 2017 so far, while Reuters reports that shipments to the US dropped further in November to 475.17K b/d, down 12% m-o-m and 36% y-o-y and the lowest since January 2003’s oil works strike.