Venezuelan bond soars above mounting chaos of shortages

Venezuela’s foreign reserves are on course to run dry by next year and its holdings of gold are sliding. Inflation is so high and the currency so weak that the country’s highest denomination banknote, the 100 bolivar note, now changes hands for just 21 US cents on the black market, where a dollar now buys 467 bolívares, compared to the official rate of 6.3. Shortages of even the most basic of items are widespread, and the average salary has plummeted to just $18 a month at the black market exchange rate. Yet investors in Venezuela’s short-term government-backed debt are laughing all the way to the bank. Yields on a $1.5bn bond issued by Petróleos de Venezuela (PDVSA), the country’s state-owned oil company, maturing in October have tumbled from a high of 53.8 per cent in January to 13.5 per cent, cementing a 33.4 per cent gain. More...