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Venezuela's PDVSA ad-hoc board to finance bond payment with uncollected oil revenue

Published 09/05/2019, 22:11
Updated 09/05/2019, 22:15
© Reuters. FILE PHOTO: A pedestrian walks next to a PDVSA gas station in Caracas

CARACAS (Reuters) - Venezuelan state oil company PDVSA will use uncollected oil revenue to make a bond payment due this month, the board of directors named by opposition leader Juan Guaido said on Thursday.

The opposition-controlled National Assembly on Tuesday approved the $71 million (£54.50 million) payment on PDVSA's 2020 bond, as it seeks to avoid losing control of PDVSA's U.S. refining subsidiary Citgo.

President Nicolas Maduro's government had remained current on that bond even as it defaulted on billions of dollars in other bonds, because the PDVSA 2020 is backed by shares in Citgo, the country's crown jewel overseas.

In a statement, the board said the funds to pay the bond would come from "PDVSA's overseas accounts receivable," referring to invoices to customers that had not yet been paid.

The board did not specify the value of PDVSA's accounts receivable abroad but said it would make the payment within the 30-day grace period that began on April 27.

If the payment is not made, bondholders could move to seize half the shares in Citgo, which PDVSA posted in collateral for the bond.

Guaido has sought to protect Venezuelan assets abroad from possible seizure by creditors since invoking the country's constitution to assume an interim presidency in January. He has been recognised as the country's rightful leader by dozens of countries, including the United States.

Maduro, a socialist, retains control of PDVSA within Venezuela, as well as state functions. Any effort by a Maduro-linked entity to make the payment would have been complicated by sanctions the United States placed on PDVSA in January in a bid to squeeze Maduro's government financially.

© Reuters. FILE PHOTO: A pedestrian walks next to a PDVSA gas station in Caracas

Neither PDVSA nor Venezuela's oil ministry immediately responded to a request for comment. Maduro calls Guaido, who presides over the National Assembly, a U.S.-backed puppet seeking to oust him in a coup, and has accused the opposition of trying to "steal" Citgo.

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