PDVSA Extends Early Bond Swap Deadline

Venezuelan state oil company PDVSA said on Thursday night it was extending the first deadline for a bond swap to Oct. 12 from Oct. 6, adding that offers it had received were below a key limit required for the operation.

"The consummation of the Exchange Offers is conditioned upon, among other things, the valid tender of at least 50% of the aggregate principal amount of the Existing Notes," PDVSA said in an English-language statement.

"As of the Prior Early Tender Deadline, substantially less than 50% of the aggregate principal amount of the Existing Notes have been tendered."

PDVSA last month offered to swap $7.1 billion in outstanding issues for a new bond, backed by its U.S. subsidiary Citgo Holding Inc, to boost its cash-strapped coffers.

But the proposal drew market scepticism, so the Caracas-based company late last month sweetened the terms, offering more 2020 bonds in exchange for bonds maturing in 2017.

Bond prices went up after the improved offer, but sources in the financial sector have said they could reverse course if the planned bond swap fails due to low participation.

"Investors will have to participate because they are in a kind of prisoner's dilemma in that if the swap isn't successful no one will do well," said a local trader after news of the extension.

PDVSA said in its statement on Thursday that the terms and conditions of the offer remained intact, adding "there will be no withdrawal rights for the remainder of the Exchange Offers."

A fund manager with PDVSA bonds said the later deadline would likely increase participation. "Some people were left out," he said.

The company has said it expected to pick up to 75 percent of the total outstanding 2017 bonds, or a total of $5.325 billion, rather than the entire $7.1 billion.

Wall Street analysts estimate that PDVSA has already bought back a considerable portion of its outstanding issues.

Reporting by Corina Pons