Venezuela’s state-owned oil company, PDVSA, has issued at least $310 million in debt to companies including General Electric as it negotiates private issues to pay off its suppliers, industry sources told Reuters.
The debt issues are stretching the finances of a company its bondholders already believe is nearing default, Kallanish Energy learns.
The securities in question aren’t bonds, but offer rights similar to those enjoyed by bondholders, and at least one issue offers dispute resolution via the Paris-based International Chamber of Commerce, according to one of three sources, who cited a term sheet.
This means if PDVSA defaults, investors holding their bonds may find there are more creditors competing for compensation than they had originally anticipated, Reuters reported.
The overall negotiations on private debt issuance, which were confirmed by seven sources, come as weak oil markets and an unraveling socialist economy have fanned concerns PDVSA will be unable to make nearly $5 billion in bond payments between now and the end of the year.
PDVSA and Venezuelan President Nicolas Maduro insist they will meet all debt obligations and dismiss default rumors as a right-wing conspiracy.
PDVSA is struggling to prevent oil services companies from stopping work in Venezuela in protest over billions of dollars in unpaid bills.
The company has worked with banks including Deutsche Bank AG to structure fixed-income securities such as promissory notes that can be sold to investors, according to one of the Reuters sources.
GE has agreed to convert $350 million in unpaid PDVSA invoices into $257 million in loan notes, which are interest-bearing securities that can be sold to other investors, a GE source told Reuters.