There has been a cold reaction from investors to the proposed voluntary bond swap by PDVSA. Under the offer, which expires on October 14, PDVSA will exchange 7 billion dollars in bonds maturing in April and November 2017 with a modestly valued 5.25% and 8.5% 2020 coupon. Amid ongoing political turbulence in the country, flat oil prices, falling output and a dysfunctional economic strategy, PDVSA's offer is highly unattractive.
A negative market reaction can be anticipated to PDVSA's bond swap, criticised by S&P as a "distressed offer".
Concerns that PDVSA may default will persist, paradoxically perhaps encouraging reluctant take-up of the proposed swap.
Despite the implacable crisis and the government's unpopularity, the opposition has yet to come up with a post-referendum plan.
