Venezuela's debt insurance costs surge on oil price drop

The cost to insure a portfolio of Venezuelan sovereign debt for five years has nearly tripled in the last four months. The up-front cost was just below $1.5 million in late June. "There's panic over whether they are going to be able to pay. That great concern is reflected in the market with yields touching 30 percent," Russ Dallen, head of Caracas Capital Markets in Miami, said in reference to yields on debt issued by state-owned oil company Petroleos de Venezuela (PDVSA). "Oil prices are being pushed to levels where we will find out how low they can go for Venezuela to be able to still carry on," said Dallen. PDVSA debt maturing in April 2017 currently trades with a yield of 28.68 percent. The bond is down 5.75 points in price with a bid at 60.25, according to Thomson Reuters data . When the debt was issued in 2007, it sold at a premium and a coupon of 5.25 percent. More…