Venezuela Enlists Russia, China on Bond Sale to Ease Cash Crunch

With the state-owned oil producer effectively shut out of the bond market with yields exceeding 20 percent, the company has hired Moscow-based Gazprombank JSC to arrange the sale of as much as $1.6 billion of yuan-denominated notes It’s the first time a Latin American junk-rated company is borrowing Chinese currency in the bond market. Venezuela is betting it can get cheaper financing by courting investors in nations with which it has strengthened political ties over the past decade. The country’s foreign reserves have plunged to a 12-year low of $16.3 billion after the price of oil plummeted, fueling concern Venezuela won’t have enough cash to pay debt. “Venezuela’s desperate, so this is the time for creative structures, but a purely market-based transaction doesn’t seem feasible,” Siobhan Morden, the head of fixed-income strategy at Jefferies Group LLC, said from New York. “There would have to be some kind of sponsorship, maybe from Chinese intra-government entities.” More…