Venezuela, PDVSA bonds jump after US waives certain sanctions

By Rodrigo Campos

NEW YORK, March 18 (Reuters) – Venezuelan bond prices rose on Wednesday after the United States issued a general license broadly authorizing U.S. companies to do business with state oil company PDVSA.

The waiver to sanctions imposed in 2019 was the latest move by U.S. President Donald Trump’s administration to ease measures on Venezuela after U.S. forces seized President Nicolas Maduro in January and amid a global spike in oil prices because of the U.S.-Israeli war with Iran.

Venezuela’s 2031 global issue rose 1.75 cents to 50.25 cents on the dollar, while PDVSA’s 2027 bond added 1.85 cents to 35.35 cents according to LSEG data.

“You’ve just added an additional reason for investors to be optimistic about Venezuela,” said Jeff Grills, head of U.S. cross markets and emerging markets debt at Aegon Asset Management, pointing to the creep-up in bond prices since the start of the war in the Middle East and the spike in oil prices.

The license “opens up further activities, to more players, to more investors,” he said.

Wednesday’s waiver does not allow trading of new bonds, a key step in an eventual debt restructuring. It clears the way for foreigners interested in investing in the country’s energy sector.

Investors have bet that a faster way to rebuild the oil infrastructure and fill Venezuela’s coffers shortens the timeline for a debt restructuring that could involve close to $150 billion in sovereign and PDVSA obligations.

“(The license) is probably going to give a little bit more flexibility to businesses operating on the ground, but in terms of the longer-term value of PDVSA, I think it’s too soon to tell,” said Stephanie Connor, attorney at Holland & Knight and a member of their public policy and regulation group.

The bonds rose even as PDVSA’s board on Tuesday ratified Asdrubal Chavez as head of its U.S. subsidiaries PDV Holding, Citgo Holding and Citgo Petroleum, following Trump’s backing of interim President Delcy Rodriguez’s administration. Chavez had been denied a U.S. visa to run Citgo before Washington imposed sanctions on Venezuela in 2019.

Chavez and his team would now need U.S. Treasury authorization to take over the refiner, whose ownership could change if Washington approves the court-organized auction of parent PDV Holding.

(Reporting by Rodrigo Campos, additional reporting by Marianna Parraga; editing by Marc Jones and Rod Nickel)